State regulators Friday approved health insurance rates that will boost premiums for small businesses and individuals an average of 3.6 percent in the first quarter of 2013, continuing an increase in health insurance rates that began over the summer.
Among the large commercial insurers, rates will rise by 6.9 percent for Blue Cross Blue Shield of Massachusetts and 3.4 percent for its HMO business, 3.9 percent for Harvard Pilgrim Health Care and 4.7 percent for its HMO business, 2.2 percent for Tufts Health Plan and 2.6 percent for its HMO business, and 0.4 percent for Fallon Community Health Plan and its HMO business.
The new rates, approved by the Division of Insurance, are for policies renewing between January and March in the Massachusetts “small group” market, which includes tens of thousands of small employers as well as self-employed and formerly uninsured individuals. Only a fraction of those renew in the first quarter compared with the second quarter, the largest renewal period.
After dipping to 0.7 percent in the third quarter, the slimmest rate increase in memory, average base rate increases climbed to 2.1 percent in the fourth quarter of this year and now to 3.6 percent in next year’s first quarter. Many businesses and individuals will pay more depending on additional factors such as their location, industry sector, and workforce age.
Health premiums, which rose at double-digit annual rates for much of the last decade, have seen more moderate increases in recent years, partly because of pressure from the Patrick administration and partly because fewer people were seeing the doctor in a weak economy.
More recently, however, insurers and regulators have seen evidence of a renewed increase in health care use, which contributed to lower health plan earnings in the third quarter.
“We understand there’s been an uptick in utilization, which is another way of saying the demand for health care is up,” said Barbara Anthony, the state’s undersecretary of consumer affairs and business regulation. “That’s not unusual for a time of economic recovery.”
Anthony said state regulators would work with insurers and health care providers to limit health care cost increases to no more than 3.6 percent in 2013, the projected rate of growth in the state’s gross domestic product, under the payment overhaul law passed last summer.