State aproves average 4.8 health insurance rate hike

c-ras-emergency6433mvh-up
Photo by Ralph Stewart

As health care cost control proposals continue to languish in legislative committees, insurance costs are continuing to rise.

Patrick administration regulators announced last Thursday that they have approved an average 4.8 percent increase in base premiums for individuals and small businesses proposed by Massachusetts insurers. The increased rates will take effect Jan. 1, 2012.

Blue Cross Blue Shield of Massachusetts was granted the highest rate of increase at 5.9 percent, while Connecticare and Health New England reported slight decreases in premium rates.

Other carriers that reported increases, approved by the state Division of Insurance, include Blue Cross HMO Blue (5.9 percent), Harvard Pilgrim HMO (5.2 percent), Neighborhood Health Plan (4.3 percent), Tufts Health Plan (4 percent), Harvard Pilgrim Health Care (3 percent), Tufts HMO (2.6 percent), CeltiCare (2.2 percent), Fallon HMO (1.5 percent) and Fallon Community Health Plan (1.2 percent).

United Health care of New England was the only plan without rates put on file with the division. Officials said the agency had requested more information from the carrier.

Base rates filed by insurers may be adjusted upward based on population, geographic availability of health care providers, and patients’ average age.

In a phone interview, the state’s top consumer affairs official noted that a year earlier, some plans had proposed increases on small businesses as high as 34 percent.

“We’ve made tremendous progress in terms of slowing down the rate of increase,” said Barbara Anthony, undersecretary of consumer affairs and business regulation. “Things have been going in the right direction since the Patrick administration really said, basically, ‘Enough is enough. We’ve got to turn this trend around.’ The industry heard us. The carriers heard us and the providers heard us. They’re doing what we urged them to do over the past couple of years.”

Anthony said a Patrick administration move to clamp down on rate increases last year by rejecting hundreds of proposed premium hikes — a jolt to the insurance industry, which immediately filed suit and contended that the administration had rejected fiscally sound rate hikes for political gain — had changed the trajectory of insurers’ premium proposals.

But an organization representing several major Massachusetts health insurers posited a different explanation.

“The plans continue to do their part to bring down premiums on small businesses and working families,” said Lora Pellegrini, president of the Massachusetts Association of Health Plans. “The rates announced today also reflect that there is a national trend that utilization is down nationally.”

Pellegrini said one potential explanation for smaller premium hikes is that due to the recession, people are putting off elective surgeries or have avoided procedures to prevent paying deductibles or copayments.

“At any point you could see utilization increase,” she added. “That’s a note of caution.”

Pellegrini also argued that efforts to work with providers to moderate cost increases had yielded “minimal response.”

In a statement, Harvard Pilgrim Health Care described its below-average premium increase as a testament to the company’s efforts to limit premium hikes “in these trying economic times.”

“The premium rate increase for the first quarter is lower than recent trends and reflects the reduced use of discretionary medical services that is occurring across the nation,” the company said in a statement to the News Service. “We continue to call on the provider community to join us in making health care more affordable by tempering price inflation, which the Attorney General and the Division of Health Care Finance and Policy have found to be the primary driver of premium increases.”

Tufts also credited its lower-than-average premium increase to “efforts to reduce health care costs.”

“Tufts Health Plan remains committed to aligning incentives for members and providers through innovative clinical management approaches to control health care utilization and contracting strategies to control medical costs,” the company said in a statement. “Moreover, it encourages providers to move toward risk-based contracting, and offers products that encourage members to select high-quality, cost-effective providers.”

Insurers ripped the Patrick administration’s move last year to reject proposed rate hikes, contending that they only seek increases to keep pace with the costs charged by hospitals for medical care. A lawsuit over the rate hikes was cut short when insurers reached agreements with the Patrick administration to accept lower increases, but several indicated that they had accepted smaller premium increases than what they needed to cover costs and are already operating drastically reduced administrative operations.

Anthony told the News Service on Thursday that she is unaware of any insurer that has encountered financial instability as a result of accepting smaller rate hikes. She also emphasized that the administration’s goal is to end rate hikes altogether, even modest ones.

“We still have to do better. The Patrick administration is not going to be satisfied until we’re looking at no increase. That’s the goal we would encourage carriers and providers to work towards,” she said.

Gov. Deval Patrick has amplified his calls in recent weeks for lawmakers to tackle legislation that would dramatically alter the health care payment and delivery system in Massachusetts. Although lawmakers defied his request to take up the bill this year, he’s urged leaders to set a firm date in January to get the bill to his desk. The bill would incentivize greater coordination of care among health care providers, in part by encouraging a system of “global payments” that compensates doctors based on healthy outcomes for patients and deemphasizes the current fee-for-service system.

“These are absolutely essential parts of getting us to zero,” Anthony said.