CHICAGO — A legislative commission Tuesday authorized the Quinn administration to negotiate group health insurance contract extensions with Health Alliance and PersonalCare that will run until June 30, 2012.

But lawmakers also warned the health insurers that they shouldn't expect to get a significant rate increase from the state.

The negotiations between the state and the insurers are to begin almost immediately, with a public hearing on the results tentatively scheduled for later this month. In the meantime, it's still not certain the state will be able to reach agreement with the insurers, whose customers include thousands of state employees, dependents and retirees in central Illinois.

"I'm concerned that could be an outcome although I don't think it's a very likely outcome," said Sen. Mike Frerichs, D-Champaign, a member of the Legislature's Commission on Government Forecasting and Accountability.

Jeff Ingrum, the CEO of Urbana-based Health Alliance, suggested at Tuesday's COGFA hearing in downtown Chicago that his company should get a rate increase in line with the approximately 5 percent increase Blue Cross Blue Shield got in a contract that was awarded last spring. In the current, 90-day contract extension Health Alliance froze its rates to the state at last year's levels.

"It wasn't too difficult to agree to continue at (fiscal year 2011) rates for 90 days," Ingrum said, adding that costs have increased for insurers. "One of the fully insured vendors obviously got an increase for FY12, Blue Cross. So I think if we're going to be fair and reasonable in the deal, it would at least be reasonable for COGFA to ask that the terms be no worse as to what's extended to Blue Cross."

But under questioning, Ingrum admitted that Blue Cross' current rates are lower than the rates Health Alliance received last year.

"But in the context that's not new," Ingrum said. "None of the downstate HMOs rates are lower than Blue Cross. They've always been somewhere between 10 to 14 percent higher. That's true for PersonalCare. That's true for Health Alliance. That was true for Humana."

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