Blue Shield hits health insurance policyholder with 54% rate hike

The increase raises questions about how costs would be controlled if a national mandate is approved that requires people lacking coverage to buy policies.

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Los Angeles resident Ruta Miller, 44, prides herself on keeping fit. "I'm super-healthy," she told me. "I exercise all the time. I eat well. I haven't even had a cold in I don't know how long."

So she was a bit startled to receive a notice from Blue Shield of California saying that her monthly insurance premium would rise by almost 54% on July 1.

Miller's situation illustrates the danger people face as politicians and industry lobbyists continue wrangling over reform of the U.S. healthcare system.

Much of the attention so far has focused on President Obama's proposal for a public insurance plan that would compete with private plans.

But an equally important issue is how costs would be controlled if, as seems likely, a national mandate is approved requiring the roughly 47 million people in this country now lacking coverage to buy policies.

"If nothing changes, then you essentially are going to be going . . . deeper and deeper into your pocket to keep the healthcare that you've got," Obama said at a town hall event in Wisconsin last week.

Miller understands that all too well.

She works part time for an auction house and part time as an actress, and has had an individual policy from Blue Shield for about eight years.

In that time, the only halfway serious condition in Miller's life has been a low thyroid level, which she was diagnosed with in 2001. She takes a pill to regulate the condition.

Other than that, she says, she's a paragon of clean living and good health.

So what could possibly explain a 54% hike in her monthly insurance premium?

The letter Miller received from Blue Shield wasn't helpful. It said that "rates are changing due to rising costs across the healthcare industry. Major drivers include hospital upgrades, new technologies and expensive new drugs."

Blue Shield could have made these claims at any point over the last 50 years.

So I put my question to Aron Ezra, a company spokesman.

He responded with a statement reiterating what was said in the letter and also blaming hospitals for charging private insurers more because they weren't being fairly compensated by Medicare and Medi-Cal.

"We agree that insurance premiums are rising far too fast -- and this is symptomatic of our broken healthcare system," Ezra said. "Our system needs an overhaul."

It turns out that Miller's sky-high premium reflects two factors. The first is a 28% increase because, well, just because.

That's apparently at the high end of what Blue Shield's individual policyholders are getting hit with this time around. Local insurance brokers say the company's increases this year run from about 8% to 28%.

The other factor is a 26% increase because Miller turns 45 in August. Although that occasion is nothing more than an arbitrary moment on the calendar and represents no material change in her health, lifestyle or behavior, to Blue Shield (along with most other insurers) this apparently marks a watershed event in her life.

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