BLUE CROSS RATE UP 5% IN JERSEY

TRENTON, Nov. 20 — The State Insurance Department today awarded the New Jersey Blue Cross an average rate in crease of 5 per cent for 1.2‐ million subscribers who hold individual policies or who are covered in group contracts of fewer than 100 members.

The biggest increases, av eraging about 11 per cent, af fect 220,000 individual or fam ily policyholders. All the in creases take effect Jan. 1 and will apply until June 30, 1974.

Commissioner Richard C. Mc Donough, who said he was ap proving the increase “grudg ingly,” expressed hope that it would be the last rate increase for these subscribers for a “number of years”

W. Jefferson Lyon, the vice president of the New Jersey Hospital Service Plan (Blue Cross), described the Commis sioner's action as drastic.” Blue Cross, which had requested an average increase of 18 per cent, got less than a third of that.

“our only comment,” Mr. Lyon said in a statement is sued here, “is that Commis sioner McDonough appears to be relying heavily on the ability of state and Federal regulatory authorities to re duce further the rate of in crease in hospital costs.”

According to the Commis sioner's statistics, the bulk of the rate increase involved the 220,000 subscribers who buy individual or family contracts and who pay their premiums on a quarterly basis.

For example, a contract for a single policyholder will in crease from $33.81 to $36.83 for a three‐month period.

More than 250,000 policy‐ holders in small group cover age were virtually unaffected by the increase, with comphre hensive rates of $25.27 for families increasing only 2 cents a month, while single coverage at the group category rose from $9.50 to $9.60 a month.

Even with the new increases, New Jersey's Blue Cross rates will still be substantially lower than comparative ones in New York City. For example, small‐ group comprehensive family rates in New York are $28.53 a month, while single‐coverage rates are $12.66.

Moreover, the New Jersey Blue Cross is capable of pro viding more liberal benefits at a lower rate, largely because hos pital and medical care costs in the state are much lower than similar costs in New York.

One Request Barred

Blue Cross originally reques ted a 143 per cent rate increase last April, but the state rejec ted this on the ground that it was “excessive.” Blue Cross than applied for an 18.1 per cent rate increase this fall, and public hearings were held on that application on Nov. 9.

According to state figures, the new rate, will apply to 29 per cent of Blue Cross's 3.8‐mil lion subscribers in the state. No policy‐holder over 65 years old will be affected.

The 2.8‐million people who are also not affected by the in crease are those included in large group plans that are cov ered by their own periodic rate increases, which, the state said, were going up more rapidly than individual or small group contracts.

According to Commissioner McDonough, the state was able to cut the requested 18 per cent increase by relieving Blue Cross of the responsibility of covering automobile accident victims, who will be covered under New Jersey's new “no‐ fault” insurance law that takes effect Jan. 1.

In addition, Commissioner McDonough said the state calcu lated a lower hospital cost in the future than projected by Blue Cross, and added that the plan's projected surplus was too generous.