Mass. insurers see 'no profit margin' with 2.3% rate hike
Massachusetts health insurers can increase premiums by an average of 2.3 percent, the smallest hikes in the state during the past 10 years. As a healthcare reform leader, Massachusetts could be starting a trend for health insurance rate-setting decisions in other markets, The Boston Globe reported.
The rate increases apply to plans covering small businesses and self-employed individuals. The Massachusetts Division of Insurance, which announced the small rate hikes Friday, said the increase could have been much worse, EmaxHealth reported.
"This is great progress," Gov. Deval Patrick (D-Mass.) said. "We went from 16, 17, and 18 percent increases a couple of years ago to 2.3 percent." Last year, premiums for small businesses and self-employed individuals increased by an average 9 percent, noted the Globe.
The insurers said they requested the unusually low rate hikes this year because of public and regulatory pressure, adding that they will barely break even with the small premium increases unless demand for care remains low. Others said they could lose money with the new rates, according to EmaxHealth.
"We're trying to be as responsive as we can to our small-business customers, and responsive to the environment," Jay McQuaide, senior vice president for Blue Cross Blue Shield of Massachusetts, told the Globe. "There is no profit margin in these rates.''
Although Harvard Pilgrim CEO Eric Schultz supports the new rates, he warned that most savings would stem from the weak economy and likely aren't sustainable. "People are afraid of taking time off from work. People may have lost their jobs and no longer have the same insurance they had," he said. "That means there may be pent-up demand. We all want to have our eyes wide open.''
This year, Blue Cross was granted a 1.9 percent increase, Harvard Pilgrim Health Care can charge 3.8 percent more, Tufts Health Plan was awarded a 1.2 percent hike, and Fallon Community Health Plan can raise its premiums by 2.7 percent.
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