Patrick-Murray Administration's Division of Insurance Places All April 1 Health-Care Base Rates on File
Insurers heed Governor's call to lower costs for small businesses, working families; New regulations strengthen Commissioner's authority to reduce increases going forward
Today's weighted average base rate increases for plans serving small businesses and individuals range from 2.8 to 9.9 percent, and stand in sharp contrast to April 2010 when carriers sought increases as high as 34 percent. By placing the base rates on file, the Division allows those rates to go into effect starting April 1, when carriers renew the largest number of policies during the year.
"The difference between this April 1 and last April 1 is really eye-opening," said Barbara Anthony, the Undersecretary of the Patrick-Murray Administration's Office of Consumer Affairs and Business Regulation. "This is further proof that Governor Patrick's efforts to lower health-care cost increases for small businesses and working families are having a positive effect, and that the dynamic in health care in Massachusetts has changed."
As part of its cost containment efforts, the Division of Insurance also filed regulations last week that detail information necessary for future reviews and enhance the rate review process; outline the rules regarding open-enrollment periods, and create a 15 percent limit on rating factors to limit "bumper shock" on small businesses. The rating factors, which take into account the age, size, location, and other details of a business, can inflate a premium increase above the base rate - often significantly when key triggers are hit, such as an employee in a very small group turning 55 years old. The regulations ease the pressure of those triggers by spreading the impact over a number of years, rather than in one large increase.
"In the last year we have seen significant changes in how everyone is looking at the cost of health care, and small businesses and working families are starting to see the benefits of those changes," said Joseph G. Murphy, the Commissioner of the Division of Insurance. "We still have long-term reform ahead of us, and we continue to work with carriers, providers, and other stakeholders in furthering the impact of health-care costs on the merged market."
During a February 2010 speech to the Boston Chamber of Commerce outlining health care cost containment initiatives, the Governor directed the Insurance Commissioner to reject excessive and unreasonable premium increases. As a result, the Division of Insurance disapproved 235 of the 274 rate filings from carriers for the second quarter of 2010. The disapprovals were appealed by carriers and the Division reached settlements with many, creating significantly lower increases for small businesses and working families. Some of the settlements also included base-rate agreements for the third and fourth quarters of 2010 and the first quarter of 2011.
Over the last year, thanks to the settlements and subsequent rate filings subject to a more robust review process, approximately 800,000 people who are in the merged market through a small-business insurance plan or as individuals have saved over $106 million.
In addition to working with carriers on lowering base rates, the Patrick-Murray Administration has aggressively targeted reducing health care costs through a number of measures. Last August, Governor Patrick signed legislation that authorizes the creation of group purchasing co-operatives, which will allow small businesses the ability to combine market power and group experience when negotiating for lower costs; the creation of tiered networks requiring carriers to provide select products that cost at least 12 percent less than "regular" products; and the creation of open-enrollment periods that reduce the costly impact of "jumpers and dumpers" on the system. The Division of Insurance plans to file these regulations shortly as part of the Patrick-Murray Administration's ongoing efforts to provide small businesses and working families with immediate and long-term relief from skyrocketing premium increases.
For more information on the Division of Insurance and 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.