2 insurers again seek double-digit increases
Earlier rejections still under appeal
By Robert Weisman, Globe Staff | June 3, 2010 - The Boston Globe
The statefs two largest health insurers again are seeking double-digit
increases in the rates charged to small businesses and individuals,
setting up another test of wills with regulators in the Patrick
administration.
Two months ago, the state Division of Insurance rejected 235 proposed
premium increases that would have taken effect April 1, requiring
insurance companies to continue billing customers at 2009 rates. The new
round of proposed increases, submitted this week, covers health plans
coming up for renewal in the three-month period that starts July 1.
Blue Cross Blue Shield of Massachusetts, the statefs biggest health
insurer, is requesting increases averaging 12 percent, on the lower end of
the range it submitted earlier in the spring. Harvard Pilgrim Health Care,
the number two carrier, wants increases that range from 8.8 percent to
11.9 percent, about the same range it sought in the round that was
rejected.
The new premium rates are gactuarially sound and will cover the costs
of the health benefits our members will receive,ff said Tara Murray, a
spokeswoman for Blue Cross Blue Shield.
But the rate filings are certain to be contentious at a time when state
officials are working to rein in health care costs and insurers say they
are being forced to sell policies at a loss.
Insurance Commissioner Joseph G. Murphy and his staff will give the
latest round of proposed increases the same kind of tough scrutiny as
those they rejected on April 1, weighing gwhether they are excessive in
relation to the health care benefits provided,ff Barbara Anthony,
undersecretary of the state Office of Consumer Affairs and Business
Regulation, said yesterday.
gIf the commissioner finds rates that are unreasonable or excessive,
then those rates will continue to be disapproved,ff Anthony said. gWe are
determined to apply the law to give relief to small businesses and working
families who pay these double-digit rate increases.ff
In filing the rate requests this week, insurers met a deadline set
during the winter under emergency regulations established by Governor
Deval Patrick, and designed to assure sufficient time for state review. In
the past, insurers would notify the state of rate increases on the day
they took effect.
Lora Pellegrini, president of the Massachusetts Association of Health
Plans, said the state rate cap is weakening insurers and distracting from
the need to bring down underlying costs charged by hospitals and doctors
with the most market clout.
gThe health plans are losing money,ff Pellegrini said. gThese rates
reflect their claims experience and what theyfre obligated to pay under
the contracts they have with providers. If they canft collect the premiums
they need, their losses are going to continue to mount.ff
Insurers are challenging the rate denials through administrative
hearings within the Insurance Division and in a lawsuit filed in Suffolk
Superior Court. A judge denied the insurersf request for a preliminary
injunction that would have let them go forward with proposed increases for
tens of thousands of customers, ruling that administrative appeals should
be exhausted before the case comes to trial.
Last month, the four major Massachusetts health insurers posted
operating losses totaling more than $150 million. They blamed the deficit
on the rate cap, which they said was causing market chaos.
In a statement, Patrick called on insurers and health care providers to
work together to solve the problem of rising costs. gWe have made progress
on providing short term relief from double-digit premium increases and
will continue to closely monitor rates to ensure they are fair,ff he said.
gTo finish the job, however, we need all stakeholders pulling in the same
direction.ff
Not every insurer filed new proposed rate increases. Tufts Health Plan,
the statefs third-largest health carrier, included its July-to-September
renewals in the proposal it submitted before April 1. Another insurer,
Fallon Community Health Plan of Worcester, submitted proposed rates for
July 1, but declined to disclose the range of increases it is seeking. In
April, Fallon asked for increases of 18 to 32 percent.
Insurance Division officials yesterday confirmed they had received a
new round of premium proposals from all the major health insurers, with
the exception of Tufts. But they said the policy is not to make the
proposed increases public until they have been approved or rejected.
Health insurers, for their part, said that until the state rules on the
latest proposed rates, they will keep quoting last yearfs rates to
businesses and individuals. gBecause we anticipate the increases will be
disapproved, wefre quoting July 2009 rates,ff said Harvard Pilgrim
spokeswoman Sharon Torgerson.
Small businesses and health care providers, who are watching the
standoff between the insurers and state officials from the sidelines, say
they are concerned about how the fallout will affect their operating costs
and their ability to hire and retain employees.
Jon B. Hurst, president of the Retailers Association of Massachusetts,
which represents 1,300 small businesses, said the newest proposed
increases should be denied. gThe message has to be sent that double-digit
increases on the backs of Main Street will not be tolerated,ff he said. At
the same time, Hurst said, he hoped the dispute could lend urgency to
efforts to control escalating health costs.
About a third of the contracts between insurers and hospitals are being
renegotiated this year. Lynn Nicholas, president of the Massachusetts
Hospital Association, said she worries that insurers, squeezed by the
state rate cap, will try to roll back payments not only to financially
strong hospitals but to those that are weaker.
gThe challenge is that most hospital margins are so thin that there is
just not enough room to give up significantly on their rates,ff Nicholas
said. gLower rates could force hospitals to make staff reductions because
two-thirds of their expenses is staff.ff
Robert Weisman can be reached at weisman@globe.com.