The Massachusetts
Division of Insurance has rejected 235 of 274 rate increases proposed by
health insurers for small groups.
State insurance commissioner Joseph G. Murphy
disapproved the base rates—which called for increases of up to 32% — after
determining that they were excessive and “unreasonable relative to the
benefits provided.”
Consumer Watchdog, a consumer advocacy group, said
the decision shows the need for effective prior-approval rate regulation
in every state to ensure that health insurers charge fair prices under
national health reform legislation.
The national health reform law is modeled on
Massachusetts’ mandatory health insurance law.
Massachusetts regulators recently adopted emergency
prior approval regulations in anticipation of large insurance premium
increases, according to Consumer Watchdog.
The Obama administration and House Democratic
officials wanted to include a provision that would have provided state
health insurance regulators in states that have no rate control statutes
the authority to ask the Department of Health and Human Services to
reject such rates.
But the provision was dropped after the Senate
parliamentarian ruled that 60 votes would have been needed to include
such a provision in legislation in the Senate.
According to Murphy, policyholders who have already
made a premium payment under the disapproved rate will receive a refund
or credit on their base rates.
The Massachusetts DOI’s emergency regulation went
into effect Feb. 10 and was added at the request of Gov. Deval Patrick
in an effort to reduce skyrocketing health care costs for small
businesses, Murphy said.
Under previous Massachusetts rules, carriers filed
rate changes before or on the effective date of the new rates.
The amended regulation requires that carriers file
small-group rates 30 days before their effective date and that
additional actuarial information be included with the proposed rate
changes, enabling the Division of Insurance to evaluate whether the
proposed rate changes are reasonable.
“At the beginning of this process and throughout
our review of the rate filings, we made it clear to insurers that the
Division of Insurance would be taking a close look at proposed
increases,” Murphy said. “In most cases, division staff determined that
the changes were excessive and necessitated disapproval.”
Carmen Balber, Washington director of Consumer
Watchdog, said, “Massachusetts has quickly come to realize that when the
government requires everyone to purchase a health insurance policy or
face tax fines, it must also exercise real oversight of what health
insurers can charge.”
