Massachusetts small businesses and individuals whose annual health insurance policies renew in the three months starting April 1 face average premium base rate increases of 2.7 percent—more modest than the 3.6 percent boost in base rates for the current quarter—according to data released Wednesday by the state Division of Insurance.
The rate hikes for the second quarter, the largest renewal period for small employers and independent contractors, follow two quarters in which average base rates edged up in that market. In the second quarter of last year, the average increase was 1.8 percent.
Overall, however, health insurance rate increases have been moderating in recent years after a decade of mostly double-digit advances in the state’s so-called small group market, which is made up of individuals and small businesses. Regulators have the power to reject excessive increases for small employers and self-employed people, but they have not done so since 2010.
“We’re in a period where both (insurance) carriers and providers are working to control health care costs,” said Barbara Anthony, the Massachusetts undersecretary of consumer affairs and business regulation, who cited recent state laws aimed at holding down spending increases. “I think we’re going in the right direction. The rates filed for April 1, which is an important quarter, show that everyone takes this seriously.”
Base rates apply to about 260,000 individuals and employees of small businesses. Many will have to pay more than the average increase, however, because of additional factors such as the employers’ location, type of business, industry sector, and workforce age.
Controlling health care costs has been a major goal of the Patrick administration in recent years. Under a law signed by the governor last summer, health care spending can grow no faster annually than the state’s economy, through 2017. The law estimates the gross state product growing 3.6 percent in 2013, establishing a target for medical care spending increases.
In the five years after 2012, the aim is for spending to grow half a percentage point below economic growth, although state leaders can modify that target under certain circumstances. The law also encourages a shift, already underway, to paying hospitals and doctors for overall patient care rather than for each test and procedure.
For the April-to-June period, Blue Cross Blue Shield asked for average rate hikes of 3.6 percent for both HMO and non-HMO policies. Harvard Pilgrim Health Care requested average increases of 3.0 percent in the HMO market and 1.4 percent in the non-HMO market.
Tufts Health Plan asked for average rate hikes of 2.2 percent in the HMO market and 2.3 percent in the non-HMO market. Fallon Community Health Plan requested average rate increases of 3.9 percent in the HMO market and 3 percent in the non-HMO market.