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Patrick orders insurers to submit rate increases

Glen Johnson

Gov. Deval Patrick, trying to cast himself as the guardian of job-creating small businesses, said he was ordering health insurers to submit proposed small business rate increases for state review — and possible rejection.

A top political rival, Republican Charles Baker, dismissed the move as a campaign-year stunt, and health insurers said it was unrealistic.

Addressing the big-business Greater Boston Chamber of Commerce last Wednesday, Patrick said an emergency regulation his administration was enacting would allow the state insurance commissioner to reject any rate increase considered “unreasonable or excessive.”

And in an era when double-digit premium increases are commonplace, Patrick said any proposed increase greater than 3.2 percent — the current level of medical inflation for consumers —  “will be challenged.”

The regulation would apply to health plans for businesses with 50 or fewer employees.

“We have to give small businesses some economic breathing room,” Patrick said.

He simultaneously asked legislative leaders to pass a bill capping doctor and other provider cost increases at a similar level. Senate President Therese Murray and House Speaker Robert DeLeo signaled their interest in a comprehensive solution.

Insurers said that was the only practical solution.

Jay McQuaide, a spokesman for Blue Cross Blue Shield of Massachusetts, the state’s largest insurer, said: “Medical costs are growing at 10 or 11 percent a year. It’s hard to envision how premium costs could be kept at 3.2 percent if medical costs are growing at multiples of that. And it’s very important for us to be able to price products relative to the cost of products.”

James Roosevelt Jr., president of the Tufts Health Plan, as well as chairman of a state association of health plan providers, said 90 cents of every premium dollar goes to providers, not insurers. Provider costs, he said, must be contained if premium growth is to be controlled.

“What we have to deal with is the underlying cost,” Roosevelt said.

Roosevelt and the industry group he leads, the Massachusetts Association of Health Plans, support a bill that would control provider cost increases and cut small business premiums by an estimated 22 percent.

Patrick acknowledged the concern, but said he was determined to stop “this circular conversation” where parties acknowledge a problem but no one takes the first step to solve it.

“The point is, we’ve got to stop acting like we can’t ask hard questions any more and expect a good, thorough and persuasive answer,” the governor said. “Because, while we have this circular debate, there are small businesses drowning under these double-digit premium increases.”

The proposal was cheered by a small business representative.

Bill Vernon, Massachusetts director of the National Federation of Independent Businesses, said most companies have only one or two workers, and many no more than five. Confronted with skyrocketing health insurance costs, they often decide against hiring more workers.

“It certainly is a tax on creating new jobs,” Vernon said.

Patrick received a glowing endorsement at the end of his remarks from the Chamber’s president, Paul Guzzi, but the governor himself jokingly told the crowd he saw “the color drain out of their faces” as he addressed a group dotted with health care executives.

Some in the crowd support Baker, who most recently headed the state’s second-largest insurer — Harvard Pilgrim Health Care.

Baker campaign manager Lenny Alcivar said the Republican candidate has been campaigning on a pledge to lower medical costs.

“I think that for a sitting governor to begin his term with double-digit spending increases, to then end his term with a last-minute, ‘conversation starter’ on health care costs, is stunningly insufficient,” Alcivar said.

At points sounding as if he was delivering a campaign speech, Patrick struck a populist chord — and tamped down speculation about higher ambitions.

“I’m not motivated by the usual things that motivate people in elected office,” he said. “I’m not motivated by ambition for higher or other office, or by entitlement, or by powerful connections just urging me, you know, into public life. I am motivated by simple gratitude. … I owe something. Gratitude makes me want to give something back.”

Associated Press