Insurance costs rise modestly
But increase tops previous quarter
Small businesses and individuals whose annual health insurance policies renew on Oct. 1 will see average premium base rate hikes of 2.1 percent in Massachusetts, increases that are more modest than the 5.5 percent average boost in base rates they absorbed a year ago.
But despite the trend of moderating increases in the past two years, the new rate hikes ticked up from the 0.7 percent average increases on policies that renewed July 1, according to data filed Friday by the state Division of Insurance. Regulators have the power to reject excessive increases for small employers and self-employed individuals, but in this case they let the requested price increases stand.
The base rates apply to thousands of customers in the so-called small group market. Many of those customers — who are mostly employers — will have to pay more than the average increase, however, because of additional factors such as their location, type of business, industry sector, and workforce age.
“This is a very slight increase,” said Barbara Anthony, the state undersecretary of consumer affairs and business regulation. “If you look at the data since 2010, there’s been a continued moderation in average rate increases. Compared to where we were two years ago when average base rate increases were in the teens, they’re now in the low single digits.”
Several health insurers, including Tufts Health Plan and Fallon Community Health Plan, asked for lower rates for policies renewing in the fourth quarter. But the state’s largest plans, Blue Cross Blue Shield of Massachusetts and Harvard Pilgrim Health Care, boosted their rates.
Anthony cited the Patrick administration’s efforts to rein in health costs, culminating in a law signed by the governor Monday that allows medical care spending to grow no faster than the state’s economy through 2017. For five years after that, spending would slow to half a percentage point below the growth of the economy, although leaders have the authority to modify that target under certain circumstances.
The bill also includes provisions to encourage a shift to paying hospitals and doctors for overall patient care rather than for each test and procedure.
“Our hope is the law will keep increases low, and move them lower,” Anthony said.
Even as Massachusetts government and business leaders have hailed the modest premium rate hikes, however, some insurers have warned that one of the main trends restraining larger increases — fewer people seeking health care — may change as the economy strengthens, more workers get health insurance, and people undergo elective procedures they delayed for fear of taking time off from work during the recession.
Blue Cross Blue Shield, the state’s largest health insurer, asked for average rate hikes of 3 percent for HMO policies renewing in the fourth quarter compared with 5.9 percent increases in the same period last year. For its non-HMO business, it requested increases of 1.1 percent compared with 5.9 percent a year ago. The insurer, based in Boston, asked for increases of 0.2 percent for its HMO business and 1.4 percent for its non-HMO business in the third quarter.
Wellesley-based Harvard Pilgrim, the state’s second largest health insurance firm, requested fourth-quarter rate increases averaging 3.6 percent for its HMO business and 2.9 percent for its non-HMO business, compared with increases of 5.9 percent for its HMO business and 3 percent for its non-HMO business in the corresponding period last year. For the third quarter, its average increases were 3.1 percent in the HMO market and 3 percent in the non-HMO market.
Tufts, in Watertown, requested a 0.6 percent drop in all fourth-quarter average premium base rates, compared with a 5.9 percent hike last year. For the third quarter, its rates fell 2.2 percent in the HMO market and 2 percent in the non-HMO market.
Worcester-based Fallon asked for a 2.2 percent decrease in its HMO market and a 2.3 percent decrease in its non-HMO market in the fourth quarter, compared with a 5.4 percent increase in its HMO market and a 5.3 percent increase in its non-HMO market last year. Fallon’s rates fell 2.2 percent in the HMO market and 2 percent in the non-HMO market in the third quarter.
Robert Weisman can be reached at email@example.com.