A Massachusetts court yesterday blocked premium increases—some as high as 40 percent—sought by six state health insurers. The action by the Suffolk Superior Court was the second time the insurance companies’ bid to boost rates was rejected. The state Division of Insurance rejected the rate hikes last month, calling them “excessive.”
The insurance companies then filed suit claiming the state has no authority to block the premium increases and sought an injunction to prevent the state from regulating premiums until the suit comes to trial. The judge rejected the request.
In an interview with the Boston Globe, Gov. Deval Patrick (D) praised the court’s decision.
Unless insurers can give us a good reason, when everything else is flat, that they deserve 20 percent, 30 percent and in some cases 40 percent increases, they’re going to be denied.
The judge said the Massachusetts companies must exhaust all their administrative appeals within the Insurance Division before the suit over the state’s ability to regulate premium costs can go forward.
The case is drawing national attention because, in 2006, Massachusetts passed a health care reform law that has several similar provisions to the recently enacted national health care reform law, including regulating premium increases.
In February, when Anthem Blue Cross in California announced it was raising premiums by as much as 39 percent, Secretary of Health and Human Services Kathleen Sebelius said, “Too many Americans are at the whim of private, for-profit insurance companies.”
Anthem Blue Cross’ parent company, WellPoint, posted $4.9 billion in profits in 2009. Sebelius said health insurance companies like WellPoint “are raking in billions in profits each year, while policyholders struggle to make ends meet in this tough economy.” In a letter to Anthem President Leslie Margolin, she demanded the company provide justification for the increases.
The extraordinary increases are up to 15 times faster than inflation. Your company’s strong financial position makes these rate increases even more difficult to understand.
Following public outcry, the company agreed to postpone the rate hikes until May, pending a review by an outside actuary appointed by the state insurance commissioner.