Blue Shield of California has submitted a rate filing with the California Department of Insurance proposing an average increase of 9% in premium rates for older off-exchange plans. The rates would become effective January 1, 2016. Individual and family slated for the rate increase are from Blue Shield Life PPO Plans
- Shield Spectrum
- Shield Savings
- Active Start
- Balance
- Vital Shield
- Shield Savings
Blue Shield projects that the rate increase will affect 31,082 policy holders with a maximum 9% and minimum of 8% increase across the various plans.
The actuarial report from Milliman, Blue Shield of California Grandfathered Individual PPO 1/1/2016 Rate Filing Certification, included with the rate filing states,
Opinion – Actuarially Sound in the Aggregate
In my opinion, the proposed premium rates are not actuarially sound in the aggregate because the premium rates for grandfathered individual PPO business in California, including investment income are not adequate to provide for expected health benefit costs, settlement costs, marketing and administrative expenses, and cost of required capital as provided to me by the Company.
The premium rates project a negative profit/risk margin of -0.21%. In my opinion, the negative margin will not result in a significant financial loss that the Company cannot absorb.
Opinion – Reasonable Premium Rate Increases
In my opinion, the proposed premium rate increases are reasonable. I based my opinion of reasonable rate increase on the factors below. The review of factors I considered was specifically required in Section A of the SB 1163:2 and SB1163:6 Guidance, titled “Unreasonable Rate Increases. – page 3 and 4 of report by Susan E. Pantely, Member of the American Academy of Actuaries
Key assumptions within the revenue and claims expense forecast for the plans is the past 2015 rate increase of 9.6%, January 2016 rate increase of 9.0%, 2017 – 2039 rate increases of 9.9%, and an annual claims expense increase of 9.9% (page 4 of Filing Exhibits.)
The complete rate filing and actuarial report can be downloaded here
