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Blue Shield of California Statement Regarding Rate Increases

Name: Johnny Wong

Title: Corporate Communications

Phone: 415-229-6321

Email: johnny.wong@blueshieldca.com

By Tom Epstein, Vice President, Public Affairs

We regret that any of our members are receiving significant premium increases, but those increases are necessary to cover the rapidly rising cost of medical care. Our average individual market rate increase over the past two years is 30%, or 15% annually. During that same period, medical costs paid by Blue Shield increased by about 15% per year.

Less than one half of one percent of our individual members will receive cumulative increases above 80 percent over a two-year period. Those people purchased policies for which medical expenses were much higher than what we collected in premiums. Blue Shield will be happy to help members who receive a large rate increase to move into a more affordable product.

Despite these rate increases, Blue Shield will not earn a profit on individual coverage. We lost $27 million on individual policies in 2010 and expect to lose money again in 2011.

We have no choice but to raise our rates to keep pace with the cost of our members' medical care, but we fully recognize that these increases are unsustainable. That's why we strongly support federal healthcare reform, which will greatly expand coverage and includes provisions that will help to restrain the cost of medical care.


Background on Blue Shield of California

Blue Shield of California, an independent member of the Blue Cross Blue Shield Association, is a not-for-profit health plan with 3.3 million members, 4,800 employees, and one of the largest provider networks in California. Founded in 1939 and headquartered in San Francisco, Blue Shield of California offers a wide range of commercial and government products throughout the state. The company has contributed more than $125 million over the past four years to the Blue Shield of California Foundation - which was named one of BusinessWeek's top 20 most generous corporate foundations. Contact your local agent or broker for more information about Blue Shield products and services, or visit the Blue Shield web site at www.blueshieldca.com.