SAN FRANCISCO – Blue Shield of California (BSC) has withdrawn its rate filing with the California Department of Insurance and the company will not increase rates to any individual or family plan member for the remainder of the year, announced BSC chairman and CEO Bruce Bodaken on Wednesday.

The not-for-profit health plan has 340,000 individual and family plan members in California.

As a result of Wednesday's decision, Blue Shield individual policyholders will save $35 million to $40 million this year.

"Our not-for-profit mission is to provide Californians with access to quality health care at an affordable price," said Bodaken. "As long-time advocates for universal healthcare coverage, we are also deeply committed to the success of health reform. The best way to fulfill our mission and make reform work is to keep costs down. By agreeing not to 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."

"We have long acknowledged that the individual health insurance market is broken and we are pleased that the rules will change in 2014," added Bodaken. "But health reform will succeed only if we restrain the rising cost and utilization of medical services that is driving premium increases. We are dedicated to working collaboratively with providers and regulators to address that issue."

Blue Shield lost $27 million on individual health insurance coverage in 2010 and even with the now withdrawn rate increase, the company expected additional losses on this business in 2011.

In October 2010, the company filed for new individual market rates with the Department of Insurance, to be effective in March 2011.

In January, Insurance Commissioner Dave Jones asked Blue Shield to delay the filing for 60 days and the company complied. At the same time, Blue Shield submitted the rates to an independent actuarial review by David Axene, who had completed rate reviews for the Department of Insurance in 2010 and discovered errors in several filings.

Blue Shield also promised to pay refunds to its members if Axene's review found that the rates were too high. On March 1, Axene released his report, which concluded that the rates were appropriate. With Wednesday's action, however, that filing is withdrawn and the new rates will not take effect.

“I am pleased that Blue Shield announced this morning that it has decided not to move forward with the third of its three rate increases in less than a year,” said Jones.

He said for some Blue Shield policyholders, the total of these three rate increases was as much as 87 percent. The third rate increase itself was an average of 6.5 percent.

Jones said Blue Shield's decision confirms the need to give the insurance commissioner the authority to reject excessive rate hikes. “Many Californians will be surprised to learn that the Insurance Commissioner does not have the authority to reject excessive health insurance rate increases. In California, unlike in 20 other states, health insurers get to decide whether to increase health insurance rates without approval from the insurance regulator, just as Blue Shield raised rates two times and proposed to raise rates yet a third time, until today’s announcement.”

Jones is sponsoring Assembly Bill 52, authored by Assemblymember Mike Feuer, to give the Insurance Commissioner the authority to reject excessive rate hikes.

During his first week as insurance commissioner, Jones learned that Blue Shield had just notified their policyholders of a March 1st premium increase. For many policyholders that would have been their third health insurance premium increase since October 2010.

He said he immediately asked Blue Shield to delay their March 1 premium increase for 60days so that he would have the time necessary to thoroughly review their rate filing. Blue Shield initially refused his request for a 60-day delay.

“I also asked Anthem Blue Cross, Aetna and PacifiCare for 60-day delays in implementing their pending rate increases and they all agreed to the delay. Blue Shield then agreed to a 60-day delay,” he said.

Over time, the companies have provided Jones' department with much of the information requested about their proposed rate increases. It was just last week that the department received additional requested information necessary to do a thorough review of these rate increases.

The information provided by Blue Shield and other insurers about their rate filings is posted on the Department’s Web site at www.insurance.ca.gov/0250-insurers/HlthRateFilings/ .