Health Inc.

Judge Lets Mass. Insurance Rate Rejections Stand

A high-profile showdown between Massachusetts health insurers and state regulators over rates will have a second act — and probably many more.

Map showing Boston, Massachusetts. i i

The battle of health insurance rates in Massachusetts isn't likely to end soon. iStockphoto.com hide caption

itoggle caption iStockphoto.com
Map showing Boston, Massachusetts.

The battle of health insurance rates in Massachusetts isn't likely to end soon.

iStockphoto.com

In a setback for the insurers, Superior Court Judge Stephen Neel told the health plans to exhaust their administrative appeals before asking the court to decide if they can raise their premiums by eight to 32 percent for individuals and workers at small firms.

The companies had asked the state court to invalidate the Massachusetts insurance commissioner's rejections of 235 proposed rate increases that were supposed to kick in April 1. So for now, the insurers remain stuck with their old rates.

Health care watchers all over the country are keeping their eyes on the case. Under a 2006 law, Massachusetts implemented almost nearly universal health coverage, including a mandate for coverage and an insurance marketplace for small businesses and uninsured individuals. The battles between insurers and the state could be a preview of battles to come as the nation implements the health law signed by President Obama in March.

So, get ready for weeks — and maybe months — of more public wrangling in Massachusetts about whether Democratic Gov. Deval Patrick and his administration can impose rules for how fast health insurance premiums can go up. That could get interesting, because Patrick's chief Republican rival in the gubernatorial election this fall is Charlie Baker, former CEO of the state's second-largest health insurer.

Patrick wants to limit premium hikes to 150 percent of the prior year's increase in medical inflation. Since the 2009 medical CPI for New England was 5.1 percent, the governor would allow premiums to go up no more than 7.7 percent. Beyond that and the proposed premium "shall be presumptively disapproved as excessive," says a proposed law the governor introduced in February.

The governor's proposal hasn't been enacted. But state insurance officials told insurers to limit their rate hikes to 7.7 percent anyway, calling that "a reasonable range."

Not surprisingly, Massachusetts insurers are fighting back. Their suit claims the state is being "unconstitutionally confiscatory." They claim their collective losses on the individual and small-business market could amount to more than $100 million, threatening their solvency.

State regulators disagree. They say the insurers' own data show even a worst-case premium increase wouldn't threaten them with insolvency.

In his 24-page decision Monday, Judge Neel said he wasn't going to substitute his judgment for the regulators, and called for a full fact-finding process before the court steps in.

A central feature of the 2006 Massachusetts health care law is a restructured market for individuals and small businesses. That's allowed many people to get insurance who couldn't buy it before. But the question now is whether sharp premium increases will put coverage out of reach again for many.

Insurers, for their part, say increased costs of care are the root of the rate problem. They blame higher charges by hospitals and doctors in the state for the premium hikes.

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