Nonprofit Blue Shield Calif: Won't Raise '11 Individual Rates

Nonprofit health insurer Blue Shield of California has withdrawn its rate filing with the state's insurance department and said Wednesday it won't increase rates to any individual or family-plan member for the rest of the year.

The insurer, which has 340,000 individual- and family-plan members in the state, had been criticized by California's insurance commissioner early this year for planning "excessive" premium increases on individual policies and, in response, submitted its rates to an independent review.

"By agreeing to not raise rates this year, we are helping to make coverage more affordable for our members during tough economic times. It's a financial risk for us, but a risk that's worth taking," Chairman and Chief Executive Bruce Bodaken said in a statement.

The organization lost $27 million on individual coverage last year and had expected additional losses in 2011 even with the now-withdrawn increases, the insurer said, adding that individual policy holders will save $35 million to $40 million this year as a result of its decision.

Blue Shield had filed late last year for new individual rates, which were to have been effective March 1. New Insurance Commissioner Dave Jones in January asked Blue Shield and the three largest for-profit U.S. health insurers--WellPoint Inc. (WLP), UnitedHealth Group Inc. (UNH) and Aetna Inc. (AET)--to delay their new rates in the state by at least 60 days. The insurers did so, although Blue Shield didn't initially agree.

Jones had said some Blue Shield consumers would see a 59% rate increase under the filing.

An independent actuarial review found the Blue Shield rates were appropriate, the insurer said, but they won't take effect as a result of the filing withdrawal.

The California Department of Insurance is expected to release a statement Wednesday about the Blue Shield decision.

WellPoint had no update to the status of its California Anthem rates, which are postponed to comply with Jones' request for time to review them, a spokeswoman said.

Representatives of Aetna and UnitedHealth didn't immediately provided information on their status.

-By Dinah Wisenberg Brin, Dow Jones Newswires, 215-982-5582; dinah.brin@dowjones.com

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