Cost salvo from health insurers

By Alice Dembner, Globe Staff

Holding down increases in health insurance premiums to 5 percent next year is a near-impossible task that could endanger the financial solvency of insurers, according to a group of Massachusetts insurance companies.

The Massachusetts Association of Health Plans delivered a letter today to the Commonwealth Health Insurance Connector saying that insurers’ hands are tied by rising health costs and constraints imposed by the state.

“Unless we address what is driving health care spending, setting a five percent premium target is essentially asking carriers to offer coverage at a loss,” said the letter, signed by the association’s president Dr. Marylou Buyse.

The letter urged the state to call hearings on ways to hold down medical costs, reiterating a strategy the insurers endorsed last week. The group speaks for all the state’s major insurers, except Blue Cross Blue Shield.

In a separate statement, Blue Cross spokesman Chris Murphy said the company is researching innovative means of controlling costs. In addition, the company is looking at traditional ways of keeping premiums down, such as limiting choice of healthcare providers.

The connector voted last week to press insurers to hold premium increases to 5 percent next year for unsubsidized plans called Commonwealth Choice that are sold across the state. The panel also instructed insurers to try to curb premiums without shifting significantly more costs to consumers.

Without changes, the connector predicted premiums would rise as much as 14 percent.

The insurers said the connector’s standards for basic health insurance coverage and the time needed to put in place cost-control measures made it extremely difficult to meet the agency’s demands.

Blue Cross said if the connector restricts the methods insurers can use to control costs and enforces a 5 percent cap, the state is essentially asking insurers to take a loss. Instead, they would likely pass on the costs to another part of the insurance market – employers and their employees.