by Lyju Kuruvilla on  January 23, 2012 at 3:40 PM Health Insurance News
 Health Insurers Hold Back on Premium Rate Increases
Premium increases have been approved by the state regulators averaging 2.3% for health insurance covering hundreds of thousands of residents. This is the most modest hike in at least a decade and is also a sign that years of efforts to control costs may be working.

The new rates are applicable in Massachusetts' "small group'' market, which includes tens of thousands of small businesses as well as self-employed and uninsured individuals. They apply to policies taking effect April 1, the biggest renewal date for insurance coverage. Last year, it was an average 9% increase for small group premium.

Governor Deval Patrick said that it was a great progress to find 16, 17, and 18% increases a couple of years ago coming down to 2.3%. It was great for small businesses and the Massachusetts economy. He said that they need to make sure it was sustainable.

For the past 2 years, Patrick has been pressing health insurers in Massachusetts, as well as hospitals and doctors, to prevent the rising health care spending. The annual double-digit percentage rate increases were crippling businesses and individuals and making it harder for employers to create jobs.

When the insurers requested an average 16.3% premium increase, the state Division of Insurance temporarily froze 2010 rates at 2009 levels. Initially, the health insurance companies protested, saying that they would lose money, but ultimately they agreed to limit 2010 increases to about 10%.

The insurers have since then been cutting administrative costs and also taking a tough stand in contract negotiations with health care providers. Hospitals and doctors have been working to deliver care more efficiently and ward off the possibility of the state moving to regulate how much they receive from insurers.

Source: Medindia

Most Popular on Medindia