Health insurers: Mass. illegally denied rate hike

Health insurers: Mass. illegally denied rate hike
Apr 8 02:04 PM US/Eastern
By GLEN JOHNSON
AP Political Writer

BOSTON (AP) - Leading Massachusetts health insurers and state regulators squared off in court Thursday in their dispute over small business health insurance premiums.

The insurers argued the state's decision last week to reject their proposed 2010 premium increases will cause "destabilizing" losses for them. The state said the insurers fundamentally misunderstand both the rate rejection and the way to resolve their dispute.

During a hearing Thursday in Suffolk Superior Court, an attorney for Blue Cross Blue Shield of Massachusetts and five members of the Massachusetts Association of Health Plans asked Judge Stephen Neel to issue a temporary injunction overruling the rejection.

Attorney Dean Richlin also asked that the companies be allowed to collect the new premiums they had proposed be effective April 1 while a trial is held on the matter.

He said requiring them to collect premiums at April 2009 rates was "grossly unsound" and would create losses of more than $100 million in the next eight months.

"These are losses that will quickly mount up, and for some number of companies, the immediate losses will be destabilizing," Richlin said.

But an attorney for the state said the industry is misreading the rejection. He also asked that the claim be dismissed because the insurers did not seek a required administrative hearing before heading to court.

Assistant Attorney General David Guberman said the rejection would not force the insurers to collect at their April 2009 rates, as Richlin said, but instead at their most recent rates. They are generally recalibrated on a monthly or quarterly basis.

"There is very much less at stake here than plaintiff presumes," Guberman told Neel.

The attorney also said that if an administrative hearing were held, it would be completed before the June "speedy trial" requested by the insurers.

The hearing lasted over 90 minutes in a courtroom filled with a standing room-only crowd of more than 100 people, including the top legal counsel to Gov. Deval Patrick and representatives of the health insurance industry.

The state Division of Insurance rejected the rates after Patrick publicly proclaimed that double-digit premium increases were preventing small businesses from adding jobs. He said the state would consider rejecting any rates it deemed "unreasonable."

The insurers say their premiums can't be capped without similar limits on the charges issued to them by doctors, hospitals and other health care providers. Otherwise, they are being forced to take a loss.

The debate is taking place in a politically charged atmosphere. Patrick, a Democrat, is seeking re-election this year, and one of his main challengers is Republican Charles Baker, the former president of Harvard Pilgrim Health Care—one of the plaintiffs in the case.

Before April 1, the state had not rejected any premium increase proposed by the industry, prompting allegations Patrick is trying to create an election issue with Baker.

Baker himself has labeled the rejection "an election-year gimmick," though he has refused to comment on the lawsuit.

The judge said he expected to issue a ruling Friday or Monday.

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