2 insurers to resume sales with old rates

By Robert Weisman
Globe Staff / April 8, 2010

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Seeking to tone down their dispute with state regulators, two Massachusetts health insurers yesterday said they will, as ordered, resume making new policies available for individuals and small businesses — using last year’s base rates, not the requested double-digit increases rejected by the state last week.

But the insurance companies said they could not guarantee that the new prices, which usually take weeks to calculate, will be ready tomorrow, as the state demanded.

Blue Cross and Blue Shield of Massachusetts, the state’s largest health insurer, and Tufts Health Plan said they will market the revamped policies on the state’s Health Connector website and through their own networks of independent brokers.

Two other health insurance companies, Harvard Pilgrim Health Care and Fallon Community Health Plan, yesterday would not commit to offering new rates by tomorrow’s deadline, despite the insurance commissioner’s stern warning that the law requires them to do so. Harvard Pilgrim, the state’s second-largest health insurer, questioned whether the directive can be enforced.

Since early this week, residents and small businesses shopping for first-time insurance, as well as existing customers seeking new policies, have been unable to get quotes as a result of a standoff between insurers and regulators.

The parties head to Suffolk Superior Court this morning for a hearing on a request by six insurers to invalidate the Division of Insurance’s denial of proposed rate increases averaging 8 to 32 percent. The higher rates, had they been approved, would have taken effect April 1.

The insurance companies posted the higher rates on the Health Connector site prior to the state’s turning them down last week, but were told by the state to remove them. Insurers complained that they could not readjust their policies until a judge ruled on whether the state’s action was legal. But after Deputy Insurance Commissioner Kevin Beagan later in the day reminded them of their obligation to make health benefits available to customers and first-time buyers, Blue Cross-Blue Shield executives decided to comply.

“We don’t see any advantage in digging the hole deeper and piling on in an adversarial way,’’ said William C. Van Fassen, interim chief executive at Blue Cross-Blue Shield. While the court is deliberating on the rate rejections, he said, the insurer would prepare the new rates. “The community can’t afford to let the situation get to ‘Apocalypse Now,’ ’’ Van Fassen said.

Blue Cross-Blue Shield, based in Boston, has 400,000 members in what is called the small group market, nearly half the individuals and small firms in that category statewide.

Barbara Anthony, undersecretary of the Office of Consumer Affairs and Business Regulation, which oversees the Insurance Division, yesterday said she was “pleased insurers are working diligently’’ to adjust their base rates to last year’s levels. She said it would be up to the insurance commissioner to determine how to enforce the directive if any insurers resisted or did not start selling policies with the updated rates by week’s end.

“We encourage them to do so expeditiously because we want to see as many people as possible insured,’’ Anthony said.

Anthony said the Patrick administration is eager to resolve the dispute with insurers, but will not back off from its insistence that double-digit rate increases are intolerable for small businesses seeking to emerge from the economic downturn. Insurers, for their part, say the state’s rejection of their proposed higher rates is forcing them to sell policies at a loss.

“We continue to be open to discussions with the insurers and others on how best to lower health care costs and how to ease the burden on small businesses and families,’’ Anthony said.

Tufts Health Plan, based in Watertown, said it also would attempt to comply with the state’s request by the end of the week for policies sold through the Commonwealth Health Insurance Connector Authority’s website, The Connector was created by the state’s 2006 health care law to help uninsured residents find coverage. Tufts said it could take longer to update rates on a separate site used by its brokers.

“We’re taking requests for quotes and getting back to people as soon as we can,’’ said Pamela Giannatsis, a spokeswoman for Tufts Health Plan.

To set new policy prices, Blue Cross-Blue Shield and Tufts will use last year’s base rates, adjusted to reflect state-approved factors for each policyholder, such as the size and average age of a company’s workforce.

Massachusetts’ other major health insurers, Fallon in Worcester and Wellesley-based Harvard Pilgrim, stopped short of promising to update their offerings and begin quoting new rates. “At this time, we’re reviewing our options and will work to resolve the matter as quickly as possible,’’ said Fallon spokeswoman Christine Cassidy.

Sharon Torgerson, a Harvard Pilgrim spokeswoman, said the company doesn’t consider the insurance commissioner’s directive “legally enforceable.’’

“We are looking forward to tomorrow’s court hearing to review the division’s illegal action and to getting back to business as usual as soon as possible,’’ she said.

Robert Weisman can be reached at