Massachusetts Officials Reject Most Proposed Health Insurance Hikes

On Thursday, Massachusetts Insurance Commissioner Joseph Murphy rejected nearly 86%, or 235 of 274, of proposed premium increases by health insurers in the state, the New York Times reports. Murphy acted at the behest of Massachusetts Gov. Deval Patrick (D).

The proposed increases were for individual and small-group plans and ranged from 7% to 34%. Patrick said the denials were necessary because "small businesses and working families can't wait any longer" for financial relief.

According to Murphy, curbing the rate increases will save consumers between $6 million and $8 million monthly.

Insurers can appeal the decision. In the meantime, the rates will remain the same as the previous year. Consumers who already began paying higher rates will be granted refunds or credits.

Decision Met With Praise, Criticism

Small businesses praised the decision, while insurers warned of disruption in the marketplace that could include voided contracts and legal challenges. Lora Pellegrini, president of the Massachusetts Association of Health Plans, said denying the increases was a "very reckless act" and insurers operating on thin margins might have difficulties paying claims.

Some political observers questioned Patrick's motives, because he is running for re-election against Charles Baker, a former CEO at insurer Harvard Pilgrim Health Care. Baker called the decision by Patrick "an election-year gimmick" (Sack, New York Times, 4/1).