The battle over health care costs in Massachusetts has intensified. Insurers want to hike rates while the regulators say no. In a showdown on regulatory power, Health insurers sue to raise rates.
A half-dozen health insurers yesterday filed a lawsuit against the state seeking to reverse last week’s decision by the insurance commissioner to block double-digit premium increases — a ruling they say could leave them with hundreds of millions in losses this year.
The proposed rate hikes would have taken effect April 1 for plans covering thousands of small businesses and individuals. Insurers wanted to raise base rates an average of 8 percent to 32 percent; tacked on to that are often additional costs calculated according to factors such as the size and age of the workforce.
Yesterday’s legal action sets the stage for a showdown between state regulators and the health insurance industry.
Governor Deval Patrick has made reining in runaway health care costs a centerpiece of his administration and his campaign for reelection — contending they are stifling the capacity of small businesses to create jobs. At the same time, health insurers argue that government is forcing them to sell policies at a loss that is unsustainable as the costs of medical services climb.
Filing the suit were Blue Cross and Blue Shield of Massachusetts, the state’s largest health insurer, and the five commercial members of the Massachusetts Association of Health Plans: Harvard Pilgrim Health Care, Tufts Health Plan, Fallon Community Health Plan, Health New England, and Neighborhood Health Plan. All are nonprofit carriers.
The insurance carriers will go before a judge on Thursday in Massachusetts Superior Court in Boston asking for a preliminary injunction against Insurance Commissioner Joseph G. Murphy’s decision to reject 235 of 274 premium hikes proposed by the insurers.
Barbara Anthony, undersecretary of the state Office of Consumer Affairs and Business Regulation, which oversees insurance regulators, defended Murphy’s rulings and said the insurers’ lawsuit lacked merit. She said state law gives the commissioner the right to reject rates that are excessive compared to the benefits provided. “He’s on firm legal ground in disapproving the rates,’’ Anthony said.
Depending on the outcome of the lawsuit, states may mandate rates, but they cannot force businesses to issue policies.
Please note insurers have stopped issuing new policies as noted in State, insurers up the ante over health rates.
The stand-off between Massachusetts regulators and health insurance companies intensified today as most insurers stopped offering new coverage to small businesses and individuals while state officials demanded that the insurers post updated rates online and resume selling such policies by the end of the week.
People seeking to buy health insurance for the first time, or existing customers looking to change policies, found themselves out of luck, at least temporarily, in the aftermath of last week’s decision by the state Division of Insurance to reject 235 of 274 premium increases proposed by insurers for what is known as the small group market. The segment covers about 800,000 residents.
That Did Not Take Long
Less than a week ago, in Health Care Price Controls Hit Massachusetts I noted that state regulators denied rate increases to Massachusetts health insurers.
At the time I asked a few questions including …
- Excuse me for asking but wasn’t Obamacare supposed to increase competition and lower health care prices?
- When do health care companies pull out of Massachusetts?
The answers are now in: 1) Yes, but it didn’t happen. Nor does it look like it ever will. 2) Now.
Mish, Doesn’t it look all too convenient that rather than trying to contain costs by pressuring hospitals to keep costs in check, insurers prefer to hike rates and keep their profit margin on the higher valued insurance premiums?
Indeed. The system is broken and we knew in advance that Obamacare did nothing to increase competition or lower costs. Instead it provided a new pool of insureds who were forced to buy health care or pay a penalty.
Mike “Mish” Shedlock
Click Here To Scroll Thru My Recent Post List