Insurers sue to halt rate cap; Health plans ask court for premium increases.
BOSTON - The top health insurers in Massachusetts on Monday filed a lawsuit against state insurance regulators, arguing a premium rate cap imposed by the Patrick administration on small business health plans was arbitrary, politically motivated and could lead to losses in the "hundreds of millions of dollars."
The filing in Suffolk Superior Court requested a hearing Thursday on a temporary injunction to suspend the cap, as well as a speedy trial by June 15. An administration official termed the lawsuit "an outrageous response."
The administration imposed its cap last Thursday, complaining the industry was seeking premiums for businesses with up to 50 employees that included "excessive increases and rates unreasonable relative to the benefits provided."
Gov. Deval Patrick has argued such increases are stifling job growth, as small businesses choose between hiring new employees and paying larger health premiums for existing ones. He is also supporting legislation aimed at controlling the charges that hospitals, doctors and other medical providers can pass along to insurers.
Insurers say capping their premiums without controlling costs addresses the effect without dealing with its cause.
"Last week's decision by the Division of Insurance to set an artificial cap will do nothing to fix the real problem of rising health care costs," said a statement issued by the Massachusetts Association of Health Plans, which filed the lawsuit on behalf of Blue Cross Blue Shield of Massachusetts and five association members: Fallon Community Health Plan, Harvard Pilgrim Health Care, Tufts Health Plan, Neighborhood Health Plan and Health New England.
The association added: "The division's effort to artificially cap rates is a reckless decision that is based in politics and will wreak havoc on the entire health care system."
Patrick spokeswoman Kimberly Haberlin said, "This lawsuit is about maintaining the status quo."
Consumer Affairs Undersecretary Barbara Anthony called it "an outrageous response" and accused the industry of "obfuscating this issue."
She noted the companies are allowed to seek an administrative hearing to buttress their requested premiums, but instead have headed to court. She also said the commissioner was plainly allowed to disapprove rates, adding, "They're not going to win this action."
The head of a trade association representing many small businesses accused the industry of "living in an alternate economic universe."
"Small businesses and their employees are paying far more for less coverage than is big business and big government," said Jon Hurt, president of the Massachusetts Retailers Association.
Last week, Murphy announced he was rejecting 235 of the companies' 274 proposed rate increases. They had proposed base price hikes averaging 8 percent to 32 percent. Patrick and Murphy argue any increase should be closer to the medical consumer price index, which has a 4.8 percent inflation rate.
Murphy issued his decision little more than a month after Patrick, in a speech to area business leaders, announced he was instructing the commissioner to consider rejecting any increase exceeding that index.
Patrick, a Democrat, is seeking re-election this fall, and one of his strongest challengers is expected to be Republican Charles Baker, Harvard Pilgrim's former president.
The timing of the order, and the fact the administration had never before rejected a proposed premium increase, prompted charges that Patrick was using his official powers to create a political issue for his campaign.
Baker labeled the rejections an "election-year gimmick."
A lawyer representing the insurers argued the commissioner's action was illegal because it ordered the insurers to keep their rates at prior levels - disallowing any increase.
The attorney, Dean Richlin, also labeled the medical CPI "an arbitrary standard" that did not account for emerging medical technologies or new drugs, as well as predicted patient loads.
He said the result will be a "short-term problem with solvency," as well as collective losses for the insurers estimated at "hundreds of millions of dollars."
In their lawsuit, the insurers asked their proposed rate increases take effect as had been planned on April 1. Alternatively, they asked that while a trial is being held, the difference between the premiums they asked to charge, and the ones the state said they could charge, be put in an escrow account awaiting a verdict.
Otherwise, Richlin said, the small businesses Patrick said he was trying to protect could face the risk of an even higher increase, should the insurers win their claim and be forced to recover any losses.
The background: The administration imposed its cap last Thursday, complaining the industry was seeking premiums for businesses with up to 50 employees that included `excessive increases and rates unreasonable relative to the benefits provided.'
The reaction: The top health insurers in Massachusetts on Monday filed a lawsuit against state insurance regulators, arguing a premium rate cap on small business health plans was arbitrary, politically motivated and could lead to losses in the `hundreds of millions of dollars.'
The argument: Patrick has said health care increases are stifling job growth, as small businesses choose between hiring new employees and paying larger health premiums.
The quote: `Small businesses and their employees are paying far more for less coverage than is big business and big government.' -Jon Hurt, president of the Massachusetts Retailers Association
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|Publication:||Telegram & Gazette (Worcester, MA)|
|Date:||Apr 6, 2010|
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