Blue Cross to Hike Some Rates 25%, Cut Benefits

Blue Cross on July 1 will increase health insurance rates an average of 25% for its 550,000 individual California policyholders under the age of 65, while at the same time announcing broad benefit cutbacks that will take effect at the end of the summer, a spokeswoman for the insurer said Wednesday.

These changes do not apply to Blue Cross group plans, many of which have also been subject to rate increases in the last year.

At the same time, Medicare supplement policies carried by thousands of people over the age of 65 will be increased by an average of 17%, spokeswoman Jeannette Hartman said.

Blue Cross confirmed the rate increases, which are similar in size to those the company implemented last year, after an inquiry from The Times, which was prompted by a letter from an Orange County policyholder complaining that his rates were going up 32% while his benefits were being reduced.

Hartman said Blue Cross, like other health insurers throughout the country, is caught in a bind between increases in medical fees and a greater demand for ever more complex and costly services, and as a result must charge higher premiums while restricting benefits.

“Our premiums are based on two factors--the cost of health care services and the usage of health services by subscribers,” she explained. “New technology, new drugs, new diagnostic tests, new surgical techniques are all driving costs up. Many services offered now never existed before. Heart bypasses and other advanced procedures are becoming more common.

“At the same time, the population on the average is aging, requiring more health care services. People are going to doctors more and getting more treatments. . . . It is not only doctors’ fees that are increasing.”

Hartman said that among 19 different medical plans covering the 550,000 policyholders under 65, only one plan, covering a scant 2,000 subscribers, saw a decrease in premiums.

But the spokeswoman said that despite the broad increases, Blue Cross still feels that if the matter is put in perspective, its health insurance premiums are reasonable.

The average cost of Blue Cross coverage, after the latest increases, will be $144 per month per household, or $1,728 a year, which is equal to the average cost to a patient of $1,800 for just one day in a hospital per year, Hartman said.

As for benefit restrictions, she said Blue Cross is reducing the amount it will pay the minority of its individual policy holders who are still at the 90% reimbursement level to 80%.

Also, she said, it has added an incentive for subscribers not required to have the approval of Blue Cross before entering a hospital to voluntarily seek such approval. In these cases, there will be a $250 additional deductible charged when approval is not obtained.

Pychiatric care benefits are also being further restricted. Blue Cross will henceforth be paying only $25 per visit for a maximum 20 visits a year. Previously it had paid a maximum of $50 a visit for up to 50 visits a year.

For ambulance service, Hartman said Blue Cross is slightly increasing benefits.

Hartman said Blue Cross has lost some customers in the last year. Last year, it said it had approximately 600,000 subscribers under 65.

The man who wrote The Times, John Meyer of Mission Viejo, said that in his case, “They have finally priced me and my family out of health care” and he was leaving the plan. He said his family’s premiums had gone up 90% in the last 2 1/2 years.