State caps more health insurance rates

By Robert Weisman, Globe Staff

State regulators wrestling with soaring health care costs this evening held fast to a cap on prices for 137 health insurance plans up for renewal this summer, freezing rates at 2009 levels, while sending three insurers scrambling to supply more data to justify their proposed double-digit rate hikes before making a decision.

At the same time, four other insurance companies were given approval for single-digit rate increases for 63 plans sold in the so-called small group market, which covers individuals and small businesses. Regulators said those insurers showed more restraint than they did in the past.

The highly anticipated decision on proposed health premium increases for the three-month period ending in September -- released early this evening after day-long deliberations by Patrick administration officials -- contrasts with regulators' earlier denial of 235 of 272 premium hikes for the April-to-June period. Those rates were frozen at last year's levels, and insurers have spent the past three months challenging the rejection. It is unclear whether today's decision by the Division of Insurance will have a long-term affect on Patrick's campaign to rein in health care expenses.

State officials have said rate caps are needed to ease the burden of rising costs on small businesses and working families in a tenuous economy. But insurers have complained the state is forcing them to sell policies at a loss, threatening their financial stability. Last week, they were buoyed by a Division of Insurance appeals panel that overturned rate caps imposed on Harvard Pilgrim Health Care.

While none of the rate proposals were rejected outright this time, Patrick administration officials said their request for additional information -- including the amount of reimbursements they pay to different health care providers -- left the burden squarely on the insurers to build the case for higher rates. The insurance division will have 30 days to rules on those rate-hike requests once insured submit the additional information.

"We're not blinking," said Barbara Anthony, state undersecretary for consumer affairs and business regulation. "We're doing our due diligence so we can stay the course. If the carriers can't provide information to justify these rates, they'll be disapproved."

Lora Pellegrini, president of the Massachusetts Association of Health Plans, a trade group, said today's ruling represented ongoing interference in the insurance industry by Governor Deval Patrick. He has pledged to turn down premium increased that he considers excessive or unreasonable.

"This action by the Patrick administration to not approve rates will continue to cause chaos in the market," Pellegrini said.

Insurance Commissioner Joseph G. Murphy today asked Harvard Pilgrim of Wellesley, Blue Cross Blue Shield HMO Blue of Boston, and Fallon Community Health Plan of Worcester to provide additional information on their requested premium hikes.

The rates approved were from Blue Cross Blue Shield of Massachusetts, Neighborhood Health Plan of Boston and a pair of Connecticut-based insurers: Aetna and ConnectiCare. Blue Cross Blue Shield of Massachusetts is the corporate parent of HMO Blue.

Three other insurers -- Tufts Health Plan, United Health Plan, and Health New England -- didn't submit rates for the summer period.

After Insurance Commissioner Joseph G. Murphy made good on Patrick's promise to reject health premiums on April 1, six insurers filed a lawsuit seeking to reinstate their proposed increases.

Suffolk Superior Court Judge Stephen E. Neel turned down the insurers' request for a preliminary injunction on April 12, instructing them to exhaust administrative appeals within the Division of Insurance before returning to the court. Those appeals continued through the spring and, in the first ruling, an appeals panel made up of three division lawyers last week overturned the Harvard Pilgrim rate cap.

Appeals by Boston-based Blue Cross Blue Shield, Tufts Health Plan of Watertown, and Fallon Community Health Plan of Worcester remain pending, with decisions expected over the summer.