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Small Business Health Insurance Costs: Are You ‘Getting Creamed’ Again?

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“Can you please do a story on the new health insurance rates that just came out?” A reader wrote recently. “Small businesses are getting creamed!! Again!”

I have yet to nail them down, but there are second-hand reports floating around of small businesses receiving notice that their health insurance premiums will rise 20, 30, even 40% this year. Readers, is this happening to you? Please let us know in a comment below. (It’s certainly happening in New Hampshire, as this recent New York Times story reports.)

How can this be, when word came out just last month that base rates for health insurance in Massachusetts would rise only in the single digits this year? Because there can be a powerful difference between the base rate and what we may actually pay. Joseph Murphy, commissioner of the state Division of Insurance, explained:

Health insurers file “base rates” with the state, he said, “and on top of that, the carriers can apply — per the insurance statutes — adjustments for the type of industry, where the business is located, the size of the group and the age of the group. Those are allowable, and those can adjust those base rates considerably — or a little — upward.”

To recap last year: The state turned thumbs down on many of the double-digit base rates filed; the insurers sued; a settlement followed; and base rates remained in the single-digit range.

This year, Joe Murphy said, “We recognize that because of these allowable factors, some individuals and small businesses are still seeing significant rate increases, and that’s why we’ve got more to do.” The last year of rate limits saved about $106 million in premiums, he said. Continue reading