For Immediate Release - July 02, 2010

Patrick-Murray Administration's Division of Insurance and Harvard Pilgrim Reach Agreement on Lower Rates

Second settlement continues Governor Patrick's relief efforts for small businesses and working families; with agreement consumers enjoy significant savings

BOSTON - July 2, 2010 - The Patrick-Murray Administration's Division of Insurance announced today an agreement on a rate settlement with Harvard Pilgrim Health Care, the second such agreement to lower rate increases for small businesses and working families.

For renewals and new policies, the agreement includes no retroactive increases, and base-rate increases lowered by as much as 15% percent compared to the originally proposed rates. As a result, thousands of small businesses and working families across the Commonwealth will pay significantly less for their health insurance than Harvard Pilgrim had originally proposed.

"Harvard Pilgrim worked cooperatively with us to reach this agreement, and we are pleased to reach a settlement that is positive for everyone involved," said Joseph G. Murphy, the Commissioner of the Division of Insurance. "This is more good news for the small businesses and working families who deserve a break from rapidly-increasing health insurance costs."

On April 1, 234 of 275 base rate changes filed by carriers were disapproved by the Division of Insurance, including 25 of 26 Harvard Pilgrim increases. In February, Governor Deval Patrick directed the Division of Insurance to use existing powers to disapprove small business rate increase filings that were excessive or unreasonable. At the time, Governor Patrick also proposed comprehensive legislation that includes a number of reforms designed to lower health-care rates charged by carriers and providers.

Harvard Pilgrim had appealed its disapprovals before a panel of Division of Insurance hearing officers, and last week the officers upheld Harvard Pilgrim's appeal. The settlement brings an end to the administrative process and any related appeal, and removes Harvard Pilgrim from the continuing lawsuit filed by carriers in Suffolk Superior Court.

"Small businesses and working families have been deeply affected by this economic emergency caused by the rapid escalation of health-care costs, and we were able to work out an immediate solution with Harvard Pilgrim to reduce that impact," Barbara Anthony, the Undersecretary of the Office of Consumer Affairs and Business Regulation. "Our work is not done, as we continue our discussions with other carriers, and the Patrick-Murray Administration continues its efforts with all stakeholders, including carriers and providers, to find long-term solutions to this problem."

Based on preliminary figures, the average annual blended base rate increase under this agreement will be in a range consistent with the previous rate settlement, and will include all of the company's products going back to April 1, 2010, and through March 2011.

For more information on the Division of Insurance and the review of health insurance costs, visit www.mass.gov/doi. The website includes stories from small-business owners struggling with insurance costs, and source information including testimony from Division's hearings across the state. The Division of Insurance is an agency within the Office of Consumer Affairs and Business Regulation. Follow the Office at www.mass.gov/consumer, its Consumer Connections Blog and at its Twitter feed, @Mass_Consumer.