For Immediate Release - August 05, 2010

Patrick-Murray Administration's Division of Insurance Settles Rate Dispute with Blue Cross-Blue Shield; Collective Agreements Cover 90 Percent of Small Businesses and Individuals in Merged Market

State's largest insurer agrees to single-digit average blended base rate increase, bringing significant savings to nearly 400,000 small businesses and working families

BOSTON - Thursday, August 5, 2010 - The Patrick-Murray Administration today announced an agreement on a health-insurance rate settlement with Blue Cross-Blue Shield that reduces proposed rate increases to an average blended rate of approximately 8 percent and delivers significant savings to nearly 400,000 small businesses and working families in Massachusetts.

Tufts Associated Health Plan entered into a settlement with the administration on Monday, bringing the total number of agreements the administration has negotiated on behalf of small businesses and working families to four.

Those agreements now cover about 90 percent of the small businesses and working families insured in the merged market in Massachusetts.

"We are pleased to be able to reach a settlement with Blue Cross-Blue Shield that is good for everyone involved," said Joseph G. Murphy, the Commissioner of the Division of Insurance. "At this point, 90 percent of small businesses and individuals in the merged market are getting a break from health-insurance costs that had been rapidly increasing for years."

The agreement covers Blue Cross-Blue Shield of Massachusetts and HMO Blue. On April 1, the Division of Insurance disapproved rate increases ranging from 9.3 percent to 22.6 percent after finding them to be unreasonable or excessive in relation to the benefit provided. The settlement reduces those increases to a range of .4 percent to 12.9 percent, with an average blended base rate of about 8 percent. As with previous agreements, the settlement with Blue Cross-Blue Shield does not include retroactive increases to April 1.

On April 1, the Division of Insurance disapproved 234 of 275 base-rate changes filed by carriers, including 72 of the 73 filings from Blue Cross-Blue Shield. In February, Governor Deval Patrick directed the Division of Insurance to use existing powers to disapprove small-business rate increases that were excessive or unreasonable.

Insurers, including Blue Cross-Blue Shield, appealed the Division's decision before a panel of Division of Insurance hearing officers. As in previous settlements, this agreement ends the carrier's appeal, and also removes it from the continuing lawsuit brought by carriers in Suffolk Superior Court. The Division of Insurance has struck agreements with Neighborhood Health Plan, Harvard Pilgrim Health Plan, Tufts Associated Health Plan, and Blue Cross-Blue Shield.

"The economic emergency caused by increasing health care costs has deeply affected small businesses and working families, and we are pleased Blue Cross-Blue Shield worked with us on an immediate solution to ease that burden," said Barbara Anthony, the Undersecretary of the Office of Consumer Affairs and Business Regulation. "While most small businesses and individuals are now seeing lower increases through these settlements, we continue to work on bringing immediate relief to the rest of the market, and to create long-term solutions for everyone involved."

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.