New policies stopped in disputed category; Regulators demand resumption by Friday
By Robert Weisman, Globe Staff | April 7, 2010
The standoff between Massachusetts regulators and health insurance companies intensified yesterday, as most insurers stopped offering new coverage to small businesses and individuals, and state officials demanded that the insurers post updated rates online and resume offering policies by Friday.
People seeking to buy health insurance for the first time, or customers looking to change policies, found they could not do so, at least temporarily.
The confusion — or market chaos, as one insurance industry official called it — followed the state Division of Insurance’s rejection last week of 235 of 274 premium increases proposed by insurers. The increases were for policies covering what is known as the small group market, which includes more than 800,000 people across Massachusetts.
Insurance Commissioner Joseph G. Murphy said he has asked insurers to quote rates for new coverage through the state’s Health Connector website by week’s end, and reminded them that they are required by law to do so. The new quotes would use base rates set last year, plus additional factors such as the age and size of a company’s workforce, Murphy said.
“If we don’t see the rates posted by the end of the week, we have a variety of enforcement tools at our disposal, including the ability to fine carriers,’’ warned Murphy. “It’s imperative that consumers have information available to them as they consider their purchasing options,’’ he said.
Health insurers, however, said they could not calculate new rates until a judge rules on their request for an injunction to prevent the state from continuing to block increases for the coverage period that started April 1. Insurance carriers had proposed premium rate increases averaging 8 to 32 percent, which the state found excessive. The case is expected to go before a Superior Court judge in Boston as early as tomorrow.
“We’re in limbo until the issue gets resolved,’’ said Lora Pellegrini, president of the Massachusetts Association of Health Plans, a trade group representing most of the state’s insurance companies. “There are no approved rates in the market right now. You’re seeing the first sign of the kind of market chaos we were worried about.’’
Insurance industry critics said the inability of new customers to buy insurance, even for a few days, is troubling. “This really is a violation of the fundamental principles of health care reform in Massachusetts, which is the universal availability of insurance,’’ said Brian Rosman, research director at Health Care for All, a Boston consumer advocacy group.
Veronica Turner, vice president of Local 1199 of the Service Employees International Union United Healthcare Workers East, released a statement suggesting “insurers are unnecessarily shutting their doors as a negotiating ploy’’ in their dispute with the state. But insurers said the suspension of rate quotes for new coverage was triggered by state officials.
After the Friday ruling denying insurers the rate hikes they wanted, insurers began calling the Commonwealth Health Insurance Connector Authority — an agency created by the state’s 2006 health care law to help uninsured residents sign up for coverage — to ask whether they could keep posting the rates that were turned down, according to agency spokesman Dick Powers. The proposed new rates had been added to the Connector website before April 1 with the expectation they would take effect on that day.
Murphy asked Connector officials to remove the posted higher rates and request that insurers recalculate them in light of the rejections. That left only one company, CeltiCare — a new insurer starting coverage in the Boston area this month — quoting rates on the Connector site, www.mahealthconnector.org.
Some insurance companies also stopped quoting policies through other brokers or intermediaries, while others continued to sell products with rates that had been rejected, telling customers they would be refunded the difference if the state’s rulings were upheld in court.
Existing policies remain in place and are not affected by the move to stop offering new coverage. Insurers are required by law to notify state regulators 30 days in advance of discontinuing a product. Insurers would not say yesterday if they would be able to comply with Murphy’s call for them to update their policies by Friday. Much will depend on how their legal challenge unfolds, they said.
“We’re trying to balance all of this,’’ said Jay McQuaide, vice president at Blue Cross and Blue Shield of Massachusetts, the state’s largest health insurer.
While Blue Cross and Blue Shield rate quotes were removed from the Connector website, its outside insurance brokers are still selling policies based on those quotes, McQuaide said. “We’ve told customers that the rates were rejected and we’re challenging that ruling,’’ he said. “And if a rate adjustment is necessary, we’ll credit their accounts in future invoices.’’
But the state’s second-largest health insurer, Harvard Pilgrim Health Plan, is not offering new small group coverage through independent brokers and other intermediaries as well as the Connector. “We are not quoting rates at this time because we don’t want to be providing inaccurate rate information,’’ said Harvard Pilgrim spokeswoman Sharon Torgerson.
Tufts Health Plan also stopped quoting rates for small group insurance through all its channels. For now, it is taking customers’ information and promising to contact them when the status of rates becomes clearer, said Patti Embry-Tautenhan, a spokeswoman for the insurer.
Robert Weisman can be reached at weisman@globe.com.
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