Massachusetts Medical Insurance Rate Hikes
Posted on Fri, Jun 18, 2010
Again, two of the largest medical insurance companies in Massachusetts are looking for rate increases that are in the double digit for individual and small business medical insurance plans. These new rate increases, if approved, would go into effect on July 1st.
Just this past March, the Massachusetts Division of Insurance declined 235 proposals for rate increases that would have gone into effect on April 1st. The medical insurance companies were then forced to charge customers 2009 premiums.
Blue Cross Blue Shield of Massachusetts is seeking rate increases that average 12%; while Harvard Pilgrim Health Care is seeking rate increases of 8.8% to 11.9%. Both insurers state that their new rate increases will be sufficient to insure the costs of the medical benefits that their customers will receive.
The rate increases could not come at a worse time, when officials of the state have been trying to control medical care costs, and medical insurance companies have had not choice but to sell plans at a loss.
If the state commissioner discovers that the rates are unreasonable or too much and not actuarially sound, then those proposed rate increases will be disapproved.
The rates proposed reflect medical insurance companies' claims history, and what they're contractually obligated to pay providers. If the medical insurance companies cannot obtain the higher premiums that is necessary, then they will continue to have a loss that keeps getting larger. In May, the top 4 medical insurance companies in Massachusetts had an operating loss of more than $150 million.
Hearings have been conducted within the Insurance Division, because medical insurance companies have opposed the rate increase denial a few months ago.
For now, medical insurance companies have been quoting 2009 rates for their new customers, and will continue to do so since they expect the latest round of proposed rate increases to be rejected.
Both medical providers and small businesses are getting very concerned about the riff between insurers and state officials, because they feel that it will have an impact on their operating costs, plus their capability to retain workers and hire new employees.
With about 1/3 of hospital and medical insurance companies contract being renegotiated in 2010, there is a worry that medical insurance companies will attempt to scale back their payments to hospitals that are financially sound, and hospitals that are financially in trouble. Right now, hospitals' margins are running so thin that they can do little to negotiate on their rates. If there were lower rates, then they would be forced to lay off employees. Employees account for about 2/3 of hospitals' expenses.