An ongoing battle between state officials and health insurers over proposed rate hikes is putting Massachusetts front and center in the debate over controlling healthcare costs.
A state Supreme Court judge fired the latest salvo with his April 12 decision to deny a preliminary injunction sought by six health insurers to raise premiums by an average of 8 percent to 32 percent for about 50,000 policies. Those policies, which were up for renewal, cover approximately 200,000 members in a pooled group of individual and small business owners.
The six insurers - Blue Cross and Blue Shield of Massachusetts, Harvard Pilgrim Health Care, Tufts Health Plan, Fallon Community Health Plan, Neighborhood Health Plan and Health New England - had posted their proposed rate increases in March on the Massachusetts Health Connector Web site. The Web site was launched in 2006 when the state enacted a universal healthcare plan, which requires, among other things, that all adults purchase some form of health insurance.
State Insurance Commissioner Joseph G. Murphy, backed by Gov. Deval L. Patrick – who'd pledged in February to reject health insurance rate hikes that rose higher than the inflation rate - then rejected 235 of 274 proposed increases, which were due to take effect on April 1, calling them "unreasonable in relation to the benefits provided and excessive." He argued that health plans needed only raise their rates as high as 5 percent to meet the medical consumer price index.
BCBSM and the Massachusetts Association of Health Plans, a trade group representing the other five plans, filed a lawsuit, and asked for a preliminary injunction and an expedited trial. Suffolk Superior Court Judge Stephen E. Neel rejected both requests, siding with state officials who said the insurers should have sought an administrative appeal rather than filing a lawsuit.
In an interview with the Boston Globe, BCBSM Vice President Jay McQuaide said the judge's decision was limited to the debate over whether the insurers could boost rates immediately. He said the insurers would "(play) the process out" and demonstrate that the rate hikes are necessary to cover the rising cost of coverage for the small-group market.
Insurers had argued that most were posting operating losses due to escalating medical expenses, and they would lose $100 million if the rate hikes were not put into effect. "Making healthcare affordable needs to start with addressing the market clout of certain hospitals and physician groups," a MAHP statement read.
State officials disagreed.
"Unless insurers can give us a good reason why, when everything else is flat, they deserve 20 percent, 30 percent, and in some cases 40 percent increases, they're going to be denied," Patrick told the Globe. He also asked healthcare providers to show some restraint as the issue plays out.
The battle had placed individuals and small businesses in limbo, unable to shop for new insurance or switch coverage to a new plan. State officials had ordered the insurers to figure insurance quotes on base rates from April 2009, but some balked, preferring instead to wait for the court's decision.
"We're pleased that (Neel's) decision ends the uncertainty that has blocked individuals' ability to buy health insurance coverage," said Brian Rosman of the Boston-based consumer group Health Care for All. "And the decision moves all of us who care about healthcare to focus on the underlying issues of our high-cost medical system."
The insurers are pursuing appeals with the state's Division of Insurance and say they will press forward with court action even as the appeal process plays itself out. The debate going forward will center on whether a state has the authority to regulate insurance premiums.