The other shoe drops on Massachusetts insurance rates for small business

Late last month, like clockwork the dreaded thick white envelope arrived from Blue Cross Blue Shield of Massachusetts, announcing the health insurance rate increases for the year starting September 1, 2010 for my small business. I took a deep breath and opened the envelope, looking for the inevitable double digit premium increase. So I was surprised to see that the proposed increase was just 3.4 percent --well over the rate of inflation but the smallest increase we've ever seen, by a long shot.My lucky day, I thought. But then I read the cover letter:

IMPORTANT: Except for some PPO plans, these are interim rates in effect until the Division of Insurance has completed its review of our 2010 rate requests. Final rates may be higher than interim rates.

Finally I remembered. My firm is actually one of those small businesses that was affected by the recent spat between the health insurers and the Patrick Administration, and this was my prize.Today a new letter arrived, entitled "Your New, Final Rates."Guess what?The new premium represents an increase of 12.8 percent, which is a lot lower than Blue Cross probably hoped for, but still awfully high. Our family rate --for fairly dumbed down HMO coverage with high deductibles and co-pays-- is $18,000 per year. Put another way, that's $2000 more than a minimum wage worker in Massachusetts would earn if they worked 40 hours a week for 50 weeks.The settlement allowed BCBS to raise rates by 0.4 to 12.9 percent. Just our luck we were at the top end of the range. BCBS had wanted to raise rates by 1.7 to 22.6 percent, and I'm sure we would have been at the top end of that range. Probably will be next year, too.I'm not too happy with BCBS about this, but there's plenty of blame to go around. I hope the silver lining is a genuine focus on costs over the coming year or two.