Mass. Gov. Wants to Expand Power of Regulators to Review Health Premiums

Massachusetts Gov. Deval Patrick has proposed reforms that include expanding the authority of state insurance regulators by allowing review of health insurance premium increases before they take effect.

At an event in Quincy, Mass., earlier this week, Patrick was joined by small business owners and instructed members of his cabinet to look into possible solutions to "double-digit" premium increases businesses are burdened with when providing coverage for their employees.

The governor's proposed initiatives include his administration filing legislation to expand the Massachusetts Division of Insurance's authority over premiums, ensuring health insurers' rates are reviewed before taking effect and allowing the regulator to disapprove rates if deemed unreasonable for the benefits provided.

The insurance division also is to hold hearings to examine premium increases on small businesses, focusing on what's needed to eliminate the rate hikes impacting the small-group market, according to a statement from Patrick's office.

Jason Lefferts, a spokesman for the insurance division, said the hearing schedule is still being finalized, but should start in the next few weeks. The public, small businesses, health insurers, doctors and hospitals will be among those able to take part.

In a statement, Consumer Watchdog said Massachusetts' move toward insurance rate regulation shows action like this is needed under proposed health reforms at the federal level. "The out-of-control costs in Massachusetts, which depends on the private market to insure all residents, show that insurers will not control costs voluntarily even as medical cost inflation slows,? said Judy Dugan, research director for the group, in a statement.

The governor's proposed reforms also include the administration filing legislation amending small-group rating rules, giving the insurance division more power to eliminate "any unnecessary administrative costs" that may be passed on to small businesses through higher premiums.

"It is no secret that today's high cost of health insurance remains one of the most pressing issues facing any Massachusetts small business owner," said Jon Hurst, president of the Retailers Association of Massachusetts, in a statement.

Patrick, along with leaders from business, education and public policy, also plans to discuss ways the public and private sector can collaborate during a summit Oct. 27 at the Boston Federal Reserve Bank.

Massachusetts' near-universal coverage legislation was signed into law in 2006 by then-Gov. Mitt Romney, a Republican. The centerpiece is the individual mandate, which requires everyone 18 or older to buy health insurance or lose their state personal income-tax exemption.

Meanwhile, all of the health-reform bills being debated at the federal level require that people buy insurance or pay some kind of financial penalty -- most likely a tax penalty.

America's Health Insurance Plans, the industry trade group, supports guaranteeing coverage to people with pre-existing medical conditions -- coupled with an enforceable mandate that everyone buy coverage. Health plans in the individual market would be required to offer coverage to all applicants.

Lawmakers on both sides don't want to talk about rate regulation because they know insurance companies hate it, Jerry Flanagan, health care policy director for Consumer Watchdog, recently told BestWire. Even many Democrats think that would be too much intrusion in the market, he said. Yet Congress requiring people to buy health insurance "is a dramatic market intrusion" (BestWire, Oct. 19, 2009).

Other observers said, though, that the proposed reforms are doing little to address ways to bring down the high costs of health care itself.