DealBook: JPMorgan's Staley to Join BlueMountain Capital

James E. Staley, a longtime JPMorgan Chase executive who served as the firm’s head of investment banking until this summer, is leaving the bank to join BlueMountain Capital Management as a managing partner, the hedge fund said on Tuesday.

The firm he is joining, a nine-year-old hedge fund with $12 billion in assets, profited from betting against JPMorgan by taking the other side of a bet on corporate debt that eventually cost the bank billions of dollars in May. The hedge fund then helped the Wall Street firm clear out its positions through another series of trades.

Mr. Staley’s departure from JPMorgan ends a 34-year career at the bank, which stretched back to the original J.P. Morgan & Company. He worked in a wide variety of roles, from the Brazilian office to the head of the equity capital markets and syndicate divisions to the head of wealth management.

Mr. Staley, an avid sailor known to most as Jes, became the chief executive of investment banking in fall 2009, presiding over the division’s expansion in the wake of the financial crisis.

But several months after the disclosure of the trading loss, JPMorgan shook up its management team. It gave Mr. Staley the new title of head of corporate and investment banking. To some inside the bank, the move effectively sidelined him in a position that was more symbolic than substantive.

At BlueMountain, Mr. Staley will be the firm’s ninth managing partner and will join the management, risk and investment committees. He will also buy an undisclosed stake in the firm.

“I’m very excited to be joining BlueMountain at a time when sea changes in the financial industry, combined with the firm’s unique strengths, open up enormous possibilities to deliver value to clients,” Mr. Staley said in a statement. “I want to thank all my colleagues at JPMorgan, my home for the last 34 years, and I look forward to working with them in the future.”

JPMorgan Chase’s chief, Jamie Dimon, sent a memo to employees on Tuesday morning:

To: All Senior Managers
From: Jamie Dimon
Subject: Jes Staley

This morning it was announced that our colleague, Jes Staley, will be leaving JPMorgan Chase to join BlueMountain Capital Management as a Managing Partner and Member of its Management Committee. Attached is BlueMountain’s press release.

Jes has been an extraordinary leader and a valued partner for many of us at JPMorgan over the years. He joined our company more than 34 years ago, and during this time he served in many critical management roles, including head of our Investment Bank, Asset Management group, Private Bank, and as one of the founders of our equities business. He has served our firm with distinction as a member of our firmwide Operating Committee, and he has been a trusted mentor to many people at our company.

While Jes is leaving JPMorgan Chase, he is joining a respected private investment firm, BlueMountain Capital. BlueMountain is an important client of ours, and we look forward to working with Jes in the future. Please join me in thanking Jes for his decades of dedicated service to JPMorgan, and in wishing him and his family all the best in the future.

Jamie

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At Hearing, Officer Tells of Suspect’s Calm After Colorado Massacre

CENTENNIAL, Colo. — A police officer testified at a preliminary hearing here on Monday that when he responded to emergency calls about a mass shooting at a crowded movie theater this summer that he found the suspected gunman standing calmly outside his car in a parking lot just moments after he had opened fire inside, the authorities say, killing 12 people and injuring 58 others.

“He was very relaxed,” said the police officer, Jason Oviatt. “It was like there weren’t normal emotional responses to anything. He seemed very detached.”

Officer Oviatt said that because the suspect, James E. Holmes, had been swathed in so many layers of body armor and equipped with a helmet and a gas mask, that he had first thought that Mr. Holmes was a fellow police officer.

Mr. Holmes eventually told arresting officers that he had booby-trapped his apartment.

Police officers were among the first people to testify at a weeklong court hearing that will determine whether there is sufficient evidence to move the case against Mr. Holmes to trial, a decision that will be made by William Sylvester, a district judge in Arapahoe County.

But for victims and their families, the hearing may offer the best, and perhaps only, opportunity to understand how the July 20 shooting unfolded, and to get a glimpse into Mr. Holmes’s actions and mind-set in the weeks before the attack. A criminal trial — if one ever convenes — remains months away, probably at the end of a long series of legal arguments, including over Mr. Holmes’s mental fitness to stand trial.

It has been more than five months since Mr. Holmes, a neuroscience graduate student, was accused of striding into a midnight screening of “The Dark Knight Rises” at a movie theater in an Aurora shopping mall and opening fire.

He faces more than 160 counts of first-degree murder and attempted murder.

Lawyers for Mr. Holmes, 25, have signaled that they might call witnesses this week to discuss his mental state in the hope of rebuting the prosecution’s evidence that Mr. Holmes spent months methodically buying 6,000 rounds of ammunition, handguns, a shotgun and an assault rifle.

Minutes after the shooting, he was arrested outside the theater, still encased in black body armor, his shaggy hair dyed neon orange.

The fact that Mr. Holmes did not kill himself, unlike gunmen at Sandy Hook Elementary School, Columbine High School or Virginia Tech, has transformed the aftermath of the tragedy into a trying and costly legal case.

Although Mr. Holmes has not yet filed a plea, his lawyers have said several times that he is mentally ill. Mr. Holmes had seen a psychologist at the University of Colorado, Denver, where he had been a graduate student, and had so alarmed his doctor that she contacted the campus police about him.

Less than a month before the shooting, after he had dropped out of his neuroscience program, Mr. Holmes sent a text message to a classmate that suggested he believed that he suffered from dysphoric mania, a bipolar condition that combines manic behavior and dark, depressive tendencies. Mr. Holmes warned the classmate to stay away from him “because I am bad news,” the classmate has said.

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Kuwait sentences second man to jail for insulting emir: lawyer

DUBAI (Reuters) – A Kuwaiti court sentenced a man to two years in prison on Monday for insulting the country’s ruler on Twitter, his lawyer said, the second to be jailed for the offence in as many days.

The U.S.-allied Gulf Arab state has clamped down in recent months on political activists who have been using social media websites to criticize the government and the ruling family.

Kuwait has seen a series of protests, including one on Sunday night, organized by the opposition since the ruling emir, Sheikh Sabah al-Ahmad al-Sabah, used emergency powers in October to change the voting system.

The court sentenced Ayyad al-Harbi, who has more than 13,000 followers on Twitter, to the prison term two months after his arrest and release on bail.

Harbi used his Twitter account to criticize the Kuwait government and the emir. He tweeted on Sunday: “Tomorrow morning is my trial’s verdict on charges of slander against the emir, spreading of false news.”

His lawyer, Mohammed al-Humidi, said Harbi would appeal against the verdict. “We’ve been taken by surprise because Kuwait has always been known internationally and in the Arab world as a democracy-loving country,” Humidi told Reuters by telephone. “People are used to democracy, but suddenly we see the constitution being undermined.”

On Sunday, Rashid Saleh al-Anzi was given two years in prison over a tweet that “stabbed the rights and powers of the emir”, according to the online newspaper Alaan. Anzi, who has 5,700 Twitter followers, was expected to appeal.

Kuwait, a U.S. ally and major oil producer, has been taking a firmer line on politically sensitive comments aired on the Internet.

In June 2012, a man was sentenced to 10 years in prison after he was convicted of endangering state security by insulting the Prophet Mohammad and the Sunni Muslim rulers of Saudi Arabia and Bahrain on social media.

Two months later, authorities detained Sheikh Meshaal al-Malik Al-Sabah, a member of the ruling family, over remarks on Twitter in which he accused authorities of corruption and called for political reform, a rights activist said.

Public demonstrations about local issues are common in a state that allows the most dissent in the Gulf, and Kuwait has avoided Arab Spring-style mass unrest that has ousted four veteran Arab dictators in the past two years.

But tensions have risen between Kuwait’s hand-picked government, in which ruling family members hold the top posts, and the elected parliament and opposition groups.

(Reporting by Mahmoud Habboush; Editing by Mark Heinrich)

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Oscar host Seth MacFarlane to announce nominations

LOS ANGELES (AP) — For the first time in 40 years, the host of the Academy Awards will help announce the Oscar nominations.

Academy officials say Oscar host Seth MacFarlane will join actress Emma Stone to reveal the nominees for the 85th annual Academy Awards. This is the first time since 1972 that an Oscar host has participated in the nominations announcement. Charlton Heston was the only other show host to announce Oscar nominees.

MacFarlane and Stone will reveal the contenders early Thursday morning from the Academy of Motion Picture Arts and Sciences' headquarters in Beverly Hills, Calif. The Academy Awards will be presented Feb. 24 at the Dolby Theatre in Los Angeles.

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Alexander Leaf Dies at 92; Linked Diet and Health

Alexander Leaf, a versatile physician and research scientist who was an early advocate of diet and exercise to prevent heart disease, and who traveled the world to make important discoveries about increasing human longevity and to help scientifically establish the dangers global warming poses to the human species, died on Dec. 24 in Boston. He was 92.

The cause was complications of Parkinson’s disease, said his wife, Barbara Leaf.

Dr. Leaf’s career toggled between pure scientific research and medical practice; unusually for the medical world, he sustained achievement in both realms. He was at different times chairman of medicine and chief of medical services at Massachusetts General Hospital in Boston, one of the nation’s premier hospitals, and led the department of preventive medicine at Harvard Medical School. He was one of the first practicing physicians ever elected to the National Academy of Sciences, in 1972.

He was probably best known for his work on heart disease, advocating prevention through exercise and diet, particularly foods low in animal fat and sodium.

Dr. Leaf’s research into the cellular biology of heart disease led him to undertake a series of expeditions in the early 1970s to study longevity in parts of the world where heart disease was rare and some people were said to live 140 years or more.

The expeditions, sponsored by the National Geographic Society, were criticized when some of the very old people in the study turned out to have lied or been misinformed about their ages. Dr. Leaf openly disavowed the project. But he never doubted the basic insights he had gleaned from the scores of interviews he conducted with people in the Caucasus Mountains, the Hunza Valley of Pakistan and the foothills of the Andes.

Whether they were 120 or older, as many of the subjects had claimed, or in their late 90s, as was later found, he concluded that people who lived in mountainous places, worked outdoors into their old age and consumed local food high in vegetable content and low in animal fat tended to live very long and healthy lives free of heart disease.

Dr. Leaf made a similar series of trips in the late 1980s, sponsored by the World Health Organization, to study the effects of climate change in Africa. His report on the study was published in The New England Journal of Medicine in 1989, drawing praise from public health experts as one of the first to link longer, hotter summers with outbreaks of infectious diseases like malaria in regions previously untouched by them.

Dr. Arnold S. Relman, a professor emeritus at Harvard Medical School and former editor in chief of The New England Journal, said Dr. Leaf “had a moral sense that science was not just for answering basic questions about the human body, but for dealing with the broader questions of human suffering and human welfare.”

Dr. Leaf was born Alexander Livshiz on April 10, 1920, in Yokohama, Japan, where his Russian-born parents had separately fled during the Russian civil war after the Bolshevik Revolution. His parents, both dentists, changed the family name when they arrived in Seattle in 1922.

He graduated from the University of Washington as a chemistry major, received his medical degree at the University of Michigan and served his internship and residency at Massachusetts General.

Besides Mrs. Leaf, whom he met while both were students at the University of Washington, his survivors include their daughters, Caroline, Rebecca and Tamara Leaf, and two grandchildren.

Dr. Leaf’s early research focused on how sodium and potassium pass through cell walls, a process crucial to cellular health and important in understanding the causes of heart disease. His work on toad bladders was considered seminal in the development of treatments for life-threatening heart arrhythmias.

As chief of medical services at Massachusetts General from 1966 to 1981, he established one of the first programs in the country for primary-care medical residents and set up a network of free clinics in poor neighborhoods around Boston. He was a founding member of Physicians for Social Responsibility, which was formed in 1961 to oppose nuclear proliferation and later added environmental and social problems to its portfolio. He led Harvard’s department of preventive medicine from 1981 to 1990.

Dr. Leaf continued his research after retiring from teaching, remaining active almost as long as the mountain-dwelling subjects of his 1970s studies.

In his 80s he began studying the effects of fish oil and fatty acids on longevity. In 2005 he was the lead author of a paper published in Circulation, the journal of the American Heart Association, describing the effectiveness of fish oil’s omega-3 fatty acids in reducing heart attacks triggered by ventricular arrhythmias, which are chaotic contractions of the heart muscles.

“There is still some uncertainty about the extent of the benefit,” Dr. Relman said, “but I dare say if you ask most cardiologists, they will tell you that as a result of that article they are taking daily doses of fish oil, myself included.”

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Boeing 787 Catches Fire at Gate at Boston Airport

BOSTON (Reuters) - A Boeing Co 787 Dreamliner aircraft with no passengers on board caught fire at Boston's Logan International Airport when a battery in its auxiliary electric system exploded, officials said.

A mechanic inspecting the Japan Airlines Co Ltd jet discovered smoke in the cockpit while performing a routine post-flight inspection and reported it to airport authorities at around 10:30 a.m. EST, said Massport Fire Chief Bob Donahue.

A fire crew responded and determined that a battery used to power the plane's electric systems when the engines are not running had exploded, Donahue said. The mechanic was the only person on board the plane when the smoke was discovered and no one was hurt by the blaze, he added.

"Passengers were in no danger as this event had happened at least 15 minutes after they deplaned," Donahue said.

The fire is the latest reported mechanical failure in a string of incidents affecting the Dreamliner, which was also plagued by production problems that delayed initial delivery by 3-1/2 years.

The U.S. jet maker's shares fell more than 2 percent to $76.01 on the news.

Boeing spokesman Marc Birtel said, "We are aware of the event and are working with our customer."

Japan Airlines representatives did not immediately respond to a call for a comment.

Officials with the Federal Aviation Administration are now looking into what caused the fire, Donahue said. The National Transportation Safety Board also announced it was opening an investigation.

The 787 relies heavily on electrical power to drive onboard systems that in other jet models are run by air pressure generated by the engines. It also suffered electrical problems during testing that prompted a redesign.

The aircraft is Boeing's first to be made of carbon composites rather than aluminum, a change that lowers the plane's weight and allows it to burn less fuel.

The Dreamliner has suffered a string of mishaps with electrical systems in recent weeks. On December 4, a United Airlines flight from Houston to Newark, New Jersey, made an emergency landing after it appeared that one of its power generators failed. On December 13, Qatar Airways said it had grounded one of its three 787 jets because of the same problem United had experienced. On December 17, United said that a second 787 in its fleet had developed electrical issues.

Boeing Chief Executive Jim McNerney last month argued that the 787 has not experienced an unusual number of problems for a new aircraft.

Boeing competes with European jetmaker Airbus.

(Additional reporting by Alwyn Scott in New York; Editing by Leslie Gevirtz and M.D. Golan)

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Obama Expected to Select Hagel for Defense Post

Pool photo by Dennis Brack

President Obama and his family arriving back at the White House on Sunday.

President Obama has selected a former Nebraska senator, Chuck Hagel, as his next defense secretary, a White House official said Sunday, turning to a prominent Republican to lead the Pentagon as it faces of the challenge of winding down the war in Afghanistan and possible reductions in military spending.

Chip Somodevilla/Getty Images

Chuck Hagel, a Republican and former U.S. senator from Nebraska.

But the nomination, which could come as early as Monday, is already encountering opposition from Republicans and Democrats alike because of Mr. Hagel’s stand on Israel and his comments about an ambassador who was gay.

Republicans, in particular, have question his stance on Israel.

“His views with regard to Israel, for example, and Iran and all the other positions that he’s taken over the years will be very much a matter of discussion in the confirmation process,” Mitch McConnell of Kentucky, the Republican leader in the Senate, said Sunday on NBC’s “Meet the Press.”

Still, Mr. McConnell said he had not decided whether he would support Mr. Hagel. “I think there will be a lot of tough questions for Senator Hagel, but he will be treated fairly by Republicans in the Senate,” Mr. McConnell said.

Senator Lindsey Graham, Republican of South Carolina, said Sunday that he personally liked Mr. Hagel, but that he was “out of the mainstream of thinking on most issues regarding foreign policy.”

“This is an in-your-face nomination of the president to all of us who are supportive of Israel,” Mr. Graham said on CNN. “I don’t know what his management experience is in regards to the Pentagon or global if anyway, so I think it’s an extremely controversial choice.”

The president has praised Mr. Hagel, a Vietnam veteran, as a “patriot,” saying nothing in his record would prevent him from serving as defense secretary.

Mr. Hagel has provoked ire among conservatives and some Jewish groups by describing pro-Israel lobbying groups as the “Jewish lobby.”

He has also come under fire for saying 14 years ago that President Bill Clinton’s nominee for ambassador to Luxembourg, James C. Hormel, was not qualified because he was “openly, aggressively gay.” He has since apologized.

Peter Baker, David E. Sanger and Mark Landler contributed reporting.

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10 Vintage Photographs of Snowflakes

Photo courtesy of Flickr, Smithsonian Institution.

Click here to view this gallery.

[More from Mashable: 5 YouTube Videos to Help Winterize Your Home]

If for some reason you didn’t believe no two snowflakes were alike, here’s your proof.

In 1885, Wilson A. Bentley successfully photographed over 5,000 snowflakes by attaching a camera to a microscope (and in turn honing the field of Photomicrography). His photographs supported his and others’ beliefs that all snowflakes were unique.

[More from Mashable: 20+ Online Resources for Planning a Winter Getaway]

Bentley become fascinated with snow as a child on a Vermont farm. He later spent time experimenting with ways to view individual snowflakes and their crystalline structure, which eventually came in handy when he had to be quick enough to capture a flake in a picture before it melted.

These photographs quickly became popular with dozens of scientists who studied Bentley’s work and published the images in several scientific magazines. In 1903, Bentley sent about 500 of his photographs to the Smithsonian, hoping they would be of interest to Secretary Samuel P. Langley.

The Smithsonian now has his vintage pics on display, undeniably proveing that snow is just so, so pretty.

Gallery photos courtesy of Flickr, Smithsonian Institution. Thumbnail photo courtesy of Flickr, AMagill.

This story originally published on Mashable here.

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'Chainsaw 3-D' carves out No. 1 debut with $23M

LOS ANGELES (AP) — It took Leatherface and his chainsaw to chase tiny hobbit Bilbo Baggins out of the top spot at the box office.

Lionsgate's horror sequel "Texas Chainsaw 3-D" debuted at No. 1 with $23 million, according to studio estimates Sunday. The movie picks up where 1974's "The Texas Chainsaw Massacre" left off, with masked killer Leatherface on the loose again.

Quentin Tarantino's revenge saga "Django Unchained" held on at No. 2 for a second-straight weekend with $20.1 million. The Weinstein Co. release raised its domestic total to $106.4 million.

After three weekends at No. 1, part one of Peter Jackson's "The Hobbit" trilogy slipped to third with $17.5 million. That lifts the domestic haul to $263.8 million for "The Hobbit," the Warner Bros. blockbuster that also has topped $500 million overseas to raise its worldwide total to about $800 million.

Also passing the $100 million mark over the weekend was Universal's musical "Les Miserables," which finished at No. 4 with $16.1 million, pushing its domestic total to $103.6 million.

Like other horror franchises, "Texas Chainsaw Massacre" has had several other remakes or sequels, but the idea always seems ripe for a new wave of fright-flick fans. Nearly two-thirds of the audience was under 25, too young — or not even born — when earlier "Texas Chainsaw Massacre" movies came out.

"It's one of those that survives each generation. It's something that continues to come back and entertain its audience," said Richie Fay, head of distribution for Lionsgate.

"Texas Chainsaw" drew a hefty 84 percent of its business from 3-D screenings. Many movies now draw 50 percent or less of their revenue from 3-D screenings, but horror fans tend to prefer paying extra to see blood and guts fly with an added dimension.

In narrower release, Matt Damon's natural-gas fracking drama "Promised Land" had a slow start in its nationwide debut, coming in at No. 10 with $4.3 million after opening in limited release a week earlier.

Released by Focus Features, "Promised Land" stars Damon as a salesman pitching rural residents on fracking technology to drill for natural gas. The film widened to 1,676 theaters, averaging a slim $2,573 a cinema, compared with $8,666 in 2,654 theaters for "Texas Chainsaw."

Hollywood began the year where it left in 2012, when business surged during the holidays to carry the industry to a record $10.8 billion at the domestic box office.

Overall business this weekend came in at $149 million, up 7 percent from the same period last year, when "The Devil Inside" led with $33.7 million, according to box-office tracker Hollywood.com. But with strong business on New Year's Day last week, Hollywood already has raked in $254.2 million, 33 percent ahead of last year.

Box-office results ebb and flow quickly, so that lead could vanish almost overnight. But with a steady lineup of potential hits right through December, studios have a chance at another revenue record this year.

"The month that we had at the end of last year that led us to a record year continued right through New Year's and on now to the first official weekend of 2013," said Hollywood.com analyst Paul Dergarabedian. "We're looking for an even stronger year this year. That's in the realm of possibility. But we have 51 weekends to go."

Estimated ticket sales for Friday through Sunday at U.S. and Canadian theaters, according to Hollywood.com. Where available, latest international numbers are also included. Final domestic figures will be released Monday.

1. "Texas Chainsaw 3-D," $23 million.

2. "Django Unchained," $20.1 million.

3. "The Hobbit: An Unexpected Journey," $17.5 million.

4. "Les Miserables," $16.1 million ($14.5 million international).

5. "Parental Guidance," $10.1 million.

6. "Jack Reacher," $9.3 million ($22.3 million international).

7. "This Is 40," $8.6 million.

8. "Lincoln," $5.3 million.

9. "The Guilt Trip," $4.5 million.

10. "Promised Land," $4.3 million.

___

Online:

http://www.hollywood.com

http://www.rentrak.com

___

Universal and Focus are owned by NBC Universal, a unit of Comcast Corp.; Sony, Columbia, Sony Screen Gems and Sony Pictures Classics are units of Sony Corp.; Paramount is owned by Viacom Inc.; Disney, Pixar and Marvel are owned by The Walt Disney Co.; Miramax is owned by Filmyard Holdings LLC; 20th Century Fox and Fox Searchlight are owned by News Corp.; Warner Bros. and New Line are units of Time Warner Inc.; MGM is owned by a group of former creditors including Highland Capital, Anchorage Advisors and Carl Icahn; Lionsgate is owned by Lions Gate Entertainment Corp.; IFC is owned by AMC Networks Inc.; Rogue is owned by Relativity Media LLC.

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Despite New Health Law, Some See Sharp Rise in Premiums

Health insurance companies across the country are seeking and winning double-digit increases in premiums for some customers, even though one of the biggest objectives of the Obama administration’s health care law was to stem the rapid rise in insurance costs for consumers.

Bob Chamberlin/Los Angeles Times

Dave Jones, the California insurance commissioner, said some insurance companies could raise rates as much as they did before the law was enacted.

Particularly vulnerable to the high rates are small businesses and people who do not have employer-provided insurance and must buy it on their own.

In California, Aetna is proposing rate increases of as much as 22 percent, Anthem Blue Cross 26 percent and Blue Shield of California 20 percent for some of those policy holders, according to the insurers’ filings with the state for 2013. These rate requests are all the more striking after a 39 percent rise sought by Anthem Blue Cross in 2010 helped give impetus to the law, known as the Affordable Care Act, which was passed the same year and will not be fully in effect until 2014.

 In other states, like Florida and Ohio, insurers have been able to raise rates by at least 20 percent for some policy holders. The rate increases can amount to several hundred dollars a month.

The proposed increases compare with about 4 percent for families with employer-based policies.

Under the health care law, regulators are now required to review any request for a rate increase of 10 percent or more; the requests are posted on a federal Web site, healthcare.gov, along with regulators’ evaluations.

The review process not only reveals the sharp disparity in the rates themselves, it also demonstrates the striking difference between places like New York, one of the 37 states where legislatures have given regulators some authority to deny or roll back rates deemed excessive, and California, which is among the states that do not have that ability.

New York, for example, recently used its sweeping powers to hold rate increases for 2013 in the individual and small group markets to under 10 percent. California can review rate requests for technical errors but cannot deny rate increases.

The double-digit requests in some states are being made despite evidence that overall health care costs appear to have slowed in recent years, increasing in the single digits annually as many people put off treatment because of the weak economy. PricewaterhouseCoopers estimates that costs may increase just 7.5 percent next year, well below the rate increases being sought by some insurers. But the companies counter that medical costs for some policy holders are rising much faster than the average, suggesting they are in a sicker population. Federal regulators contend that premiums would be higher still without the law, which also sets limits on profits and administrative costs and provides for rebates if insurers exceed those limits.

Critics, like Dave Jones, the California insurance commissioner and one of two health plan regulators in that state, said that without a federal provision giving all regulators the ability to deny excessive rate increases, some insurance companies can raise rates as much as they did before the law was enacted.

“This is business as usual,” Mr. Jones said. “It’s a huge loophole in the Affordable Care Act,” he said.

While Mr. Jones has not yet weighed in on the insurers’ most recent requests, he is pushing for a state law that will give him that authority. Without legislative action, the state can only question the basis for the high rates, sometimes resulting in the insurer withdrawing or modifying the proposed rate increase.

The California insurers say they have no choice but to raise premiums if their underlying medical costs have increased. “We need these rates to even come reasonably close to covering the expenses of this population,” said Tom Epstein, a spokesman for Blue Shield of California. The insurer is requesting a range of increases, which average about 12 percent for 2013.

Although rates paid by employers are more closely tracked than rates for individuals and small businesses, policy experts say the law has probably kept at least some rates lower than they otherwise would have been.

“There’s no question that review of rates makes a difference, that it results in lower rates paid by consumers and small businesses,” said Larry Levitt, an executive at the Kaiser Family Foundation, which estimated in an October report that rate review was responsible for lowering premiums for one out of every five filings.

Federal officials say the law has resulted in significant savings. “The health care law includes new tools to hold insurers accountable for premium hikes and give rebates to consumers,” said Brian Cook, a spokesman for Medicare, which is helping to oversee the insurance reforms.

“Insurers have already paid $1.1 billion in rebates, and rate review programs have helped save consumers an additional $1 billion in lower premiums,” he said. If insurers collect premiums and do not spend at least 80 cents out of every dollar on care for their customers, the law requires them to refund the excess.

As a result of the review process, federal officials say, rates were reduced, on average, by nearly three percentage points, according to a report issued last September.

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