Blue Shield of California had originally planned to raise individual rates by an average of 6.5% starting on May 1st.
Tom Epstein is with the carrier. He says their decision to withdraw a rate increase filing with the state Department of Insurance means the company will lose up to $40 million this year.
"It is a financial risk but we think it's a risk worth taking. The fact that people are suffering in today's economy is definitely a factor."
The proposed rate hike would've been Blue Shield's third increase since October raising average member's rates by 30%. That triggered public outcry.
State Insurance Commissioner Dave Jones:
"Over 1,000 people have contacted my office to express their concern about the impact of the proposed rate hikes on them and their families."
Blue Shield is one of California's largest health insurers with more than 200,000 policy holders.