Treating Health Insurance Companies Like Untilties...

In Mass. 

What a very fine idea!

By Robert Weisman, Globe Staff

Making good on Governor Deval Patrick's promise to reject health insurance rate hikes deemed excessive, the state Division of Insurance this morning turned down 235 of 274 increases proposed by Massachusetts health insurers for small businesses and individuals.

The ruling, stemming from emergency regulations the governor put in place in February, marks the first time state government in Massachusetts has used its authority to deny health premium increases. It is expected to have wide ramifications in the health care industry and in the gubernatorial campaign, where Republican challenger Charles Baker already has criticized rate caps.

Insurance Commissioner Joseph G. Murphy disapproved most of the base rates proposed by state health plans, finding that they included excessive increases and were "unreasonable relative to the benefits provided," according to a statement issued by the division.

The rates were to have taken effect today for many health insurance policies in the so-called small group market, a merged market that includes small businesses and individuals.

Health insurance carriers had proposed rate hikes ranging from 8 to 32 percent. For now, the old premium rates remain in effect. Any policyholders that already have made premium payments under the new rates will receive a refund or credit, the insurance division said.

"For me, this is all about jobs," said Patrick as he met with a group of 10 small business owners at a clock factory in Chelsea this morning. "And creating conditions in which small businesses will start hiring. And without that, we don't have an economic recovery."

Patrick said insurance companies have spent too much time at the table without solving the problem.

"It's going to get bumpy for a little bit because the industry is powerful," he said. "They're good people but they're politically powerful."

The insurance division used the emergency regulations filed by Patrick on Feb. 10 to require insurers to submit their proposed increases, and actuarial data backing them up, 30 days in advance so they could be reviewed by the division staff and outside consultants. In the past, the carriers simply notified the division of rate increases on the day they went into effect.

While the governor has said the effort will protect Massachusetts small businesses from double-digit premium increases that will cripple their ability to create jobs, critics have said the move could squeeze financially weak insurers and force them to renegotiate contracts with hospitals.

The insurance division, in letters to insurers, outlined reasons for the disapprovals. Among them were proposing rates significantly above the medical consumer price index - a measure estimated at 4.8 percent - and failing to explain how different health care providers were paid different rates of reimbursement.

Division officials have said insurers will have the ability to file administrative appeals.

Reaction to the insurance ruling was swift and strong this morning.

"It's welcome news on Main Street in Massachusetts," said Jon B. Hurst, president of the Retailers Association of Massachusetts, which represents 3,100 retailers and restaurants across the state. "They're losing jobs, they're not hiring, and they're seeing double-digit health premium increases every year. The real message is that a line in the sand has been drawn. And big health care in the state has got to get out of its alternative universe."

Lora Pellegrini, president of the Massachusetts Association of Health Plans, said her organization was working with insurers to look at their adminstrative and legal options.

Three of the four largest nonprofit health insurance carriers posted operating losses in 2009 due to job cuts at businesses that buy health insurance, increased use of medical services by employees fearful of losing benefits, and the slumping value of investments.

"We're going to review all the options that are available to us," Pellegrini said. "At the end of the day, if we're not going to be allowed to have our prices cover our costs, that will be a problem for the whole industry."

Citing the gubernatorial campaign, in which Patrick is running against Baker, a former insurance executive, Pellegrini said, "Unfortunatly, there's a lot of politics going on. The division had the power to review rates for years and they've never done anything until now. It smells fishy."

Noah Bierman of the Globe Staff contributed to this report.

Let The Sun Shine In......