Mass. Health Insurance Premiums On The Rise

You would think word that health care premiums won't go up as much next year would be a reason to celebrate. Health insurers are certainly relieved to have some moderately good news.

"The average rate of premium increases that our customers will experience will be the lowest level since 2005," said Blue Cross Blue Shield Vice President Jay McQuaide.

Insurance Premiums At Low Levels, But Rates Are Climbing

Blue Cross is telling medium to large firms their premiums will increase 4 to 6 percent. At Tufts Health Plan the range is a 5 to 8 percent rise and at Harvard Pilgrim Health Care it's a 5 to 10 percent increase. Keep in mind that employers will have higher and lower increases depending on the type of plan they buy and how much care employees used in the recent past.

These rates are down a few points from last year, but they are still climbing much faster than the expected inflation rate of 1.6 percent in Massachusetts.

"Premiums are still increasing at a rate that is neither acceptable nor sustainable," said McQuaide, "and we know here at Blue Cross that we’ve got more work to do to make health care affordable."

You’ll hear that “more work to do” message from Harvard Pilgrim and Tufts as well. The plans are under increasing pressure from employers, consumers and the state to reduce premiums.

"Premiums are still increasing at a rate that is neither acceptable nor sustainable."

Blue Cross Blue Shield Vice President Jay McQuaide

Harvard Pilgrim’s Senior Vice President of Sales Vin Capozzi points to two reasons premiums aren’t rising as fast this year. First, said Capozzi, insurers are negotiating tougher contracts with doctors and hospitals who are also under pressure to cut costs. And second, patients aren’t getting as much care.

"People have less disposable income or are reluctant to go for elective procedures," said Capozzi. "That’s really associated with the products we’re selling today, more prudence in the buyer (and) the economy, so when you add that all up, rates are coming down."

But insurers don’t know if patients are avoiding knee replacement surgery or an MRI because they're worried about the economy or losing their job, or because many patients have an insurance plan that requires paying a big chunk of the cost before insurance kicks in.

Game Changer: High-Deductible Plans

These high-deductible plans and plans that charge us more to go to high cost hospitals are changing the nature of health insurance, says Drew Altman, president of the Kaiser Family Foundation, "From more comprehensive coverage to less comprehensive coverage with what conservatives like to call 'more skin in the game.' "

Shifting more of the cost of an MRI, for example, to the patient could be good if it means patients and doctors make smarter choices about when and where to get the test. The cost shift will be bad, says Altman, if it means patients can’t afford or put off care they need.

But many employers say these plans are the only affordable insurance options they have.

"The marketplace is finally responding to cost pressures that everyone has been facing," said Rick Lord, president of Associated Industries of Massachusetts. "But I think the jury is out on whether that’s enough or we’re going to need more government intervention."

Lord is talking about a hot debate in the health care world that asks whether insurers and hospitals lower health care costs on their own or whether it's time for the state to set the prices that doctors, hospitals and insurers can charge. Based on these latest premium increases, at least one consumer group is convinced it’s time for the state to act.

Pressure To Hold Down Insurance To Hold Down Premiums

"Those rates are nothing less than big neon lights flashing 'legislative solution, legislative solution, legislative solution,' and we can’t ignore it anymore," said the Rev. Hurmon Hamilton, with the Greater Boston Interfaith Organization (GBIO). GBIO and Health Care for All had called on insurers to freeze premiums for one year, a call insurers said was unrealistic.

The Patrick administration is pressuring insurers to hold down premiums for small employers, those with 50 or fewer workers. It can’t set premiums for this group; it can only approve or reject rates. The current small business base rate is 5.9 percent. Insurers say the state is, in effect, setting rates by telling health plans what rate will be acceptable.

But Undersecretary for Consumer Affairs Barbara Anthony said, "the state is not doing anything outside of its authority. We have the authority to disapprove rates that are excessive or unreasonable. We also have the moral authority to encourage insurance companies and hospitals to make those rates as low as possible."

The state doesn’t have any authority to review the rates insurers charge medium and large employers. Rates for any size company can be much higher or possibly lower than the average increase. Ellie McCormack of Belmont found that out this summer when she received a premium increase of more than 30 percent.

"I was outraged because it was so high and because I had gone in for my one annual physical and because I didn’t have any health problems," McCormack.

Blue Cross Blue Shield said about half McCormack’s rate hike was based on age — she turned 54 — and the balance was the increased cost of her plan. McCormack switched insurers to save some money, but she’s worried about what she will face next year.

"I thought the whole idea was that it was going to get more affordable for people, but it doesn’t seem like this is more affordable if it’s going to continue to go up like this, with no way to predict how much it’s going to go up," she said.

If McCormack worked for a large firm with lots of young male employees, then her insurance would likely be at the low end of the scale next year.