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State, Harvard Pilgrim Strike Deal On Rate Hikes

The Boston Globe reports that Harvard Pilgrim Health Care, which last week won approval to increase its health insurance rates for small businesses and individuals, has struck a deal with the state, agreeing to limit its proposed rate hikes and remove itself from an ongoing legal dispute with regulators.

Reporter Robert Weisman says Gov. Deval Patrick immediately seized on the deal as an administrative victory in the battle to control escalating health care costs:

The settlement means "thousands of small businesses and families will have lower insurance premiums," Patrick said. "That is real relief at a time when working people need it and in a context where, frankly, the increase in rates, at double-digit pace, year over year over year, defies logic or explanation."

Harvard Pilgrim, based in Wellesley, agreed not to bill customers for the increased rates retroactively to April 1, when they would have taken effect if the state had not capped them at 2009 levels. Going forward, it agreed to raise rates by a range of 7 to 11 percent in the merged market of small firms and individuals. Initially, it had requested rate increases averaging 8 to 12 percent in that market.

And the chief of Harvard Pilgrim told The Globe that the accord shows the insurer is willing to compromise:

"We made a financial sacrifice as a way of bringing this to closure," said Eric H. Schultz, chief executive for Harvard Pilgrim. "We also want to begin the real work of creating solutions that will lower the medical cost trend" through new products and legislation.

This program aired on July 2, 2010. The audio for this program is not available.

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