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MA Health Insurers Succumb to Pressure to Scale Back Increases

Ernie Shannon's picture

Massachusetts health insurance regulators have approved a rate hike of 2.3 percent on small businesses and self-employed individuals - the smallest such increase in years.

The Massachusetts Division of Insurance announced the slight rise in costs Friday and proclaimed that while the increase will impact hundreds of thousands of Massachusetts residents, it could have been much worse.

Governor Deval Patrick praised the restraint showed by health insurance companies, hospitals, and doctors in keeping costs in check and allowing regulators to minimize the rate increase due to begin in April. He had criticized the recent growth in insurance costs that included 16 to 18 percent increases in the last few years to this year’s 2.3.

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In explaining the history of recent rate changes, the Division of Insurance released statistics showing the dramatic change in charges by insurance companies in recent years. For instance, Blue Cross-Blue Shield raised their rates 17.6 percent in 2010, 9.2 percent in 2011, and only 1.9 percent this year. The Fallon Community Health Plan hiked their prices 25.2, 8.4 and 2.7 percent respectively. Harvard Pilgrim Health Care boosted their costs 11.2, 9.9, and 3.8 during the same years while Tufts Health Plan grew their premiums by 16.1, 9.0, and 1.2 percent likewise.

The dramatic in health insurance charges comes as good news for Massachusetts that has seen its health care system ravaged during the 2012 primary season by Republican opponents of former Massachusetts Governor Mitt Romney and by Democratic supporters of President Barrack Obama who see health care costs as a big election issue.

What’s more, state government was recently rattled by a decision from the Massachusetts Supreme Judicial Court requiring the state to once again insure legal immigrants. The state legislature has approved a bill restricting and, in some cases, eliminating health insurance for legal immigrants as a way of cutting the state’s expenditures. The court ruled the action unconstitutional and now state budget leaders must make up the difference between $40 million, the price of a whittled down program, and the full cost of $120 million.

While insurers are largely supportive of the governor’s urging for price restraints, most admit that they expect to lose money with the new rates. The new rates are in response to pressure from the governor’s office and community groups, but most insurance companies say there simply isn’t a profit margin in the new rates.

Source: Massachusetts Division of Insurance