Panel to press insurers on premiums
Seeks to hold increases to 5% for some plans
Concerned that rising costs could jeopardize Massachusetts' landmark health insurance initiative, a state panel voted yesterday to press insurers to hold premium increases to 5 percent next year for unsubsidized plans sold across the state. The panel also instructed insurers to try to curb premiums without shifting significantly more costs to consumers.
The steps by the Commonwealth Health Insurance Connector could directly affect tens of thousands of people, and the panel hopes it will nudge similar changes in the larger insurance market. Connector officials and healthcare analysts agree that neither the state nor individuals will be able to afford coverage without aggressive price control.
"We've got to do something about cost, and we've got to do it now," Dolores Mitchell, a member of the connector board, said after yesterday's meeting. The connector oversees the state's health insurance initiative and negotiates contracts with insurers for new plans authorized by the Legislature.
Without the limit, connector staff estimated that premiums for the Commonwealth Choice insurance would increase between 4 and 14 percent depending on the coverage an individual chooses. Mitchell and some board members said even 5 percent might be too large an increase.
The connector is proposing several ways insurers can hold down prices: steering patients to doctors and hospitals that provide lower-cost, high-quality care, encouraging more use of generic drugs, and strengthening programs to prevent and treat chronic illnesses such as diabetes and high blood pressure. Most insurers already use these methods to some degree, but the connector suggested that insurers make the Commonwealth Choice plans a test market to push the envelope.
The connector's move comes amid a chorus of proposals to control healthcare costs and insurance premiums, which have been rising an average of at least 10 percent a year. On Monday, a group of Massachusetts insurers suggested that the Legislature hold annual hearings on premium increases, a proposal first advanced by Senate President Therese Murray in October. The state Health Care Quality and Cost Council has also suggested renewed focus on reducing medical errors and avoiding unnecessary hospital stays.
Yesterday, the connector board also discussed ways to hold down the costs of the state-subsidized insurance program, Commonwealth Care, which are already rising because of higher than expected enrollment. Without any changes in the program, costs per member next year could rise as much as 14 percent, the staff predicted. The board considered raising patient co-payments and adjusting how it pays insurers, but postponed any decisions until later this month.
"We need . . . to keep premiums affordable for individuals and the state," said Leslie Kirwan, chairwoman of the board and state secretary of administration and finance. "This is critical to the sustainability of health reform."
Through its unsubsidized program, the connector currently sells four levels of coverage offered by six insurers that won the agency's "seal of approval" early this year. Consumers may purchase the same coverage directly through the insurers - Blue Cross Blue Shield of Massachusetts, Harvard Pilgrim Health Plan, Tufts Health Plan, Fallon Community Health Plan, Neighborhood Health Plan, and Health New England.
The current seals of approval and right to sell plans through the connector expire June 30. The connector will seek proposals from the same six insurers next month for coverage through June 2009. Aside from the cost proposals, the agency does not want to make major changes in the plans, which were first offered last spring. About 10,000 people had purchased these plans through the connector as of Nov. 1, the latest numbers available, and the state expects another 25,000 to buy them by June 30.
If insurers can not hold premium increases to 5 percent without changing benefits, the connector will ask them to submit an alternative plan showing exactly what reductions in benefits, or increases in patient copayments, are needed to meet the 5 percent limit.
"Five percent is a really tough target," said Dr. Marylou Buyse, president of the Massachusetts Association of Health Plans, an insurance trade group. "Premiums reflect the underlying cost of care, which is going up 8 to 10 percent [per year]. If the plans are going to meet the 5 percent target, providers are going to have to scale back their demands."
The best-selling Commonwealth Choice plans have been the two levels of coverage with the cheapest premiums - young adult plans open to those age 19 to 26 without access to work-based insurance and bronze plans, which offer basic coverage, but have high deductibles or other significant out-of-pocket costs. The connector is suggesting that insurers design new bronze plans that reduce premiums by using a limited network of healthcare providers or a tiered structure that charges patients more if they use more expensive facilities. 