Group Files Suit Against Blue Cross' Massive Premium Hikes

Consumer Watchdog, a Santa Monica-based nonprofit, announced the suit Monday, stating that the insurer "used enormous rate hikes to force patients into lower benefit and higher deductible health coverage in violation of state law."

Patients claim that the increases, which the insurer previously agreed to put of until May 1, would put them into a "death spiral" where an insurer blocks many new customers and the blames its lack of market penetration for premium hikes that squeeze out older, less-desirable customers.

Blue Cross has blamed, in part, the state's high unemployment, which has subtracted tens of thousands of employees from its service and forced it to do more with less people and employers paying into its system. But the New York Times noted recently that parent company WellPoint has opposed President Obama's health-care plan which, in part, would require people to retain insurance (giving companies like Blue Cross a guaranteed base).

"Many of the Californians who were recently hit with massive premium increases were informed several months ago by Blue Cross that it was closing their policies and were offered alternative plans with much more limited benefits," states Consumer Watchdog. "Those who chose to stay with their current coverage were later told that its price was going to skyrocket."