I was trying to think of a good analogy to the recent developments in Massachusetts, where last week a state court judge denied (full text here) a request by six health plans that would have allowed them to raise premiums for small group and individual members at double-digit levels effective April 1.
Massachusetts Superior Court Judge Stephen Neel denied the plans’ request for a temporary restraining order blocking the state Dept. of Insurance from disapproving the hikes; instead, the state will perform an in-depth review of the proposed increases. The state disapproved the hikes through an emergency regulation issued at the direction of Mass. Gov. Deval Patrick as part of an effort to rein in rising healthcare costs for small businesses.
State Insurance Commissioner Joseph Murphy found the increases to be “excessive” and “unreasonable,” noting the hikes significantly outpaced the rate of increase in medical costs without adequate justification. The six plans — Blue Cross Blue Shield of Massachusetts, Fallon, Harvard Pilgrim, Health New England, Neighborhood and Tufts – had argued that failure to raise rates immediately would result in combined losses topping $100 million, deplete reserves, weaken financial stability and even threaten insolvency. However, the judge ruled that the plans “have not demonstrated that they will suffer irreparable economic harm over the next few months,” during which time they can pursue the usual administrative remedies and appeals.
Here’s my analogy: Remember when President Reagan broke the air traffic controllers union, and suddenly it was open season on workers? Well, healthcare reform and President Obama’s rhetoric on premium increases by companies like WellPoint has resulted in open season on health plans. Or as Justin Lake of UBS says, “Given the high-profile nature of the Massachusetts rate dispute, we do note the potential for a domino effect with other states possibly using the opportunity to join in.” Stay tuned.
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