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State presses insurers to add low-cost plan options

By Beth Healy
Globe Staff / June 10, 2010

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The state issued a new salvo in its battle with health insurers yesterday, sending letters to four large firms urging them to offer low-cost medical plans for small businesses or face legal sanctions.

In letters to the chief executives of the Commonwealth’s dominant health insurers, Glen M. Shor, executive director of the state’s Health Insurance Connector Authority, pressed the companies to participate in the state’s small-business program. If they don’t, he wrote, “we will consider any and all legal avenues available to us to ensure that contractual obligations are met.’’

The insurers — Harvard Pilgrim Health Care, Tufts Health Plan, Blue Cross Blue Shield of Massachusetts, and Fallon Community Health Plan — balked at providing their plans through the state after the Massachusetts insurance commissioner capped the rates they can charge at 2009 levels. The insurers had sought doubt-digit increases for those rates, and have argued that they will lose money on the capped rates.

“Given the rate cap that the administration has imposed on the health plans, none of them are in a position to enter into any kind of new endeavors with the state at this time,’’ said Eric Linzer, spokesman for the Massachusetts Association of Health Plans, a trade group for the health insurers.

The Connector, which was established under the state health care overhaul to oversee its implementation, launched a program in February that will place the agency in charge of administering plans for roughly 17,000 small businesses. Small businesses have long complained about high health insurance costs because they lack the clout that larger companies have to negotiate lower rates. A state law prohibits them from banding together to purchase insurance.

The state program, called Business Express, is aimed at helping employers with 50 or fewer workers save money on medical coverage. Since its launch, more than 1,600 businesses have signed up, the state said, covering 4,500 employees and their relatives.

Shor, in an interview, said the authority has been in conversations with the health plans to persuade them to participate. “As we see it, they are hurting small businesses by not participating in Business Express,’’ he said. “It is our responsibility to serve small businesses, so we take this very seriously.’’ Shor said the authority believes the plans “also have legal obligations to participate in this program.’’

Sharon Torgerson, a spokeswoman for Harvard Pilgrim, said the company “is committed to offering small business affordable health care solutions, and we presently make coverage available to them outside of the Connector. We look forward to working with the Connector to make Business Express a viable program in which all health plans participate.’’

Representatives for Tufts and Fallon confirmed that their CEOs had received the letters from the state but declined to comment further. A spokeswoman for Blue Cross Blue Shield could not be reached late yesterday. Blue Cross Blue Shield has never agreed to be involved with the state small business program.

With the large insurers currently refusing to participate in the state’s plan, small businesses now have only three health plans they can tap under Business Express: CeltiCare Health Plan, Neighborhood Health Plan, and Health New England. In one example, the state said SuperLogics Inc., a 12-person firm in Waltham, saved $9,300 in costs by enrolling in the program.

Beth Healy can be reached at bhealy@globe.com.

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