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WARWICK — They’ve cut budgets. They’ve frozen salaries. They’ve asked workers to contribute more for their health insurance and to pay higher deductibles. And, in this economy, they can’t fall back on raising prices.

How, then, are companies supposed to afford the double-digit rate hikes sought by the state’s two dominant health insurance companies, business leaders demanded at a news conference on Monday.

“Let’s get the word out,” said Donald Nokes, president of NetCenergy, who called the increases sought by Blue Cross & Blue Shield of Rhode Island and UnitedHealthCare of New England “completely unreasonable.”

About a half-dozen business leaders, joined by Lt. Gov. Elizabeth H. Roberts at NetCenergy’s offices, urged that Health Insurance Commissioner Christopher Koller reject the rate increases. Blue Cross has proposed hiking average premiums 13.9 percent for small employers and 16.3 percent for large employers, while UnitedHealthCare is seeking hikes of 11.6 percent and 13.2 percent.

The Blue Cross request includes a 31 percent hike in administrative costs and a 136 percent increase in profits and cash reserves, according to an analysis by Koller’s office. Both insurers say they expect hospital payments to jump 10 to 16 percent and prescription costs to leap 11 to 12 percent next year.

Last year, Koller’s office began disseminating information to the public on rate hike requests and has expanded the effort this year by including even more data and analysis online. The reports indicate, among other things, that both Blue Cross and United spend more on administrative costs (between 4 and 5 percentage points) and less on actual medical payments (4 to 10 points) than industry averages.

Koller is expected to decide by June 12 whether to approve or reject the proposals or approve increases lower than requested. The public has until Friday to comment on the proposed rate hikes.

Chris Medici, a spokesman for Blue Cross, defended the requested rate hikes when asked for comment.

“We certainly realize these are challenging times for everyone as they are for Blue Cross & Blue Shield of Rhode Island,” he said. “We’re making every effort to ensure we’re addressing the issue of affordability. However, despite these efforts, the cost of health care continues to rise.”

He said hospital fees and the costs of new technologies and specialty drugs have risen and that the nonprofit insurer has felt the cumulative effects of past rate-hike requests being reduced. Last year, for example, Blue Cross sought increases of 9.3 percent to 9.7 percent, but was permitted hikes of 7.8 to 8.3 percent.

Medici said that partly explains why the insurer’s cash reserve has fallen from 23.6 percent of premium revenues in December to 22.3, below the 23-to-31-percent range recommended in a study sponsored by the health commissioner that Blue Cross uses as a guideline. The money is needed as a cushion in the event of a disruption in revenues, Medici said.

And despite the projected increase in administrative expenses, these costs still represent less than 3 percent of expenses, he said.

While health-care costs are rising faster than the consumer price index, which is used to measure inflation, comparing the two is “a bit misleading” because of the differing mix of products and services, Medici said.

The recession, he said, has also depressed revenues from premiums because of companies going out of business or eliminating health-care coverage.

“The pool over which we can spread the cost is smaller and those that remain must bear a larger portion of the costs,” Medici said.

Roberts, in a letter to Koller, asked the insurance commissioner to reject both rate requests until “we can bring all the stakeholders together to the table and forge a new path forward to control health-care costs in Rhode Island.”

A good model, the lieutenant governor said at the news conference, is how industry groups pledged at the White House in May to realize $2 trillion in savings in health care over the next decade.

The Rhode Island Business Group on Health, representing 75 small and large employers, also sent a letter to Koller opposing the rate hikes.

“These increases cause more problems than they solve,” said J. Michael Vittoria, the group’s president and the vice president of human resources for Sperian, the Smithfield producer of protective eyewear. “In the long run, they put more people out of work.”

Linda Lulli, associate vice president for human resources at Bryant University, said the proposed premium hikes could translate into $7 million in increased costs for the university. Neither Bryant, nor its employees can absorb a hit that large, she said.

Other speakers at the news conference included Sid Goldman, owner of Greylawn Foods, and Herbert J. Gray, vice president of human resources for Cranston Print Works.Proposed rate hikes

•For businesses with 15 or more employees: Blue Cross, 16.3 percent; UnitedHealthCare, 11.6 percent

•For businesses with fewer than 15 employees: Blue Cross, 13.9 percent; UnitedHealthCare, 13.2 percent -

•For more information on the proposed rate hikes and how to comment to Health Insurance Commissioner Christopher Koller, go to www.ohic.ri.gov.

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Source: Office of Health Insurance Commissioner

rsalit@projo.com