Connector Faced With Increasing Insurance Rates

November 19, 2007

Insurers offering unsubsidized Commonwealth Choice plans through the Connector estimate rates could rise by between 10 percent and 12 percent next year.

Reportedly, Tufts Health Plan, one of the six carriers, is projecting a 4 percent increase in plan costs compared to the five other carriers Harvard Pilgrim, Blue Cross Blue Shield, Fallon Community Health Plan, Neighborhood Health Plan and Health New England that are projecting 2008 rates to rise by 10 percent to 12 percent . The rate projections are based on data collected by providers over the past six months, said state officials. The highest projected increases are coming in the program's most heavily subscribed policies, which account for most of the 10,200 Massachusetts residents covered under the plan.

The projected rate increases reflect the high cost of health care in Massachusetts, said Marylou Buyse, president and CEO of the Massachusetts Association of Health Plans. Buyse said the plan rates are also expensive because the board wants plans that offer broad coverage "You can't expect to buy a Cadillac at Hyundai prices," said Buyse. "We need some Fords and Chevys in terms of health care choices."

Board members, faced with the projections, today debated whether to raise plan co-payments, limit the network of doctors covered under each plan, or cap the rate of insurance premium increases - all solutions that may have negative implications for providers. Board members reviewed their options at Friday's board meeting to absorb the projected cost increases, including upping co-pays, creating plans that encourage subscribers to use generic prescription drugs, and encouraging carriers to use network plans that would limit the number of hospitals or doctors covered under an in-network plan.

Leslie Kirwan, who chairs the board and serves as state administration and finance secretary, said she hoped to send a "strong message" to insurance company executives about pitching affordable and attractive plan options. "We have to very mindful of affordability. This will not be able to be sustained without affordability," said Kirwan. "We´re hoping to see innovation not just Washington Monument-type budget games."

Some authority officials fear if insurance companies are pushed too hard they will opt out of participating and the number of plan choices for residents will drop. Jon Kingsdale, executive director of the Connector Authority, urged board members to act cautiously. "We want to be prudent, careful and precise," said Kingsdale.

"There is no painless answer here," said Jonathan Gruber, a board member and economics professor at the Massachusetts Institute of Technology. The board is also weighing a decision to set a cap on annual rate increases.

Please feel free to e-mail any questions, comments or concerns. We will continue to update you as more information becomes available.

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