Updated March 28 at 12:29am

Blue Cross is asking for a 10.5% increase in rates for 2012. What would that kind of rise do to your business?


Last week Blue Cross & Blue Shield of Rhode Island filed for a rate increase of 10.5 percent for its small and large group employer insurance plans for 2012.

The insurer cited anticipated medical claims increases of 6 percent for the year, in addition to a 2 percent increase in administrative costs and a need to bolster its reserves.

Many businesses have been forced to modify their insurance coverage in the last few years, often requiring employees to pay more. Some have even canceled their insurance coverage.

What would your company do if hit with that size increase in health insurance rates?


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Good question, but difficult to get at the real results. Many--some think most--small businesses providing this benefit now treat it like a "defined contribution" benefit. In other words all increases now get passed along to the employees. Naturally this impacts take up and hence the pool of covered people has been continuously decreasing. This is really a death spiral. The higher the rates go the fewer covered lives, which causes the insurers to have to raise the rates again to cover their fixed admin costs. The ultimate collapse is not that far off now I don't think.

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