Plan to cap premiums, rates would be crucial check to rising costs

March 25, 2010

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IN HIS March 17 op-ed “Caps hurt health system,’’ Michael Widmer correctly points out that many small businesses have recently incurred significant double-digit premium rate increases, but suggests that reports issued by the Division of Health Care Finance and Policy imply that such disparities may not be as stark as what many small businesses are reporting. The reports analyzed cost trends from 2006 through 2008; the analysis did not capture trends from the past 18 months, when many of the most troubling premium increases have been reported. Furthermore, the division’s analysis reflected average premiums for small businesses, which means that the data mask spikes in premiums.

The health care cost crisis is hurting the economy’s ability to create jobs. The situation will worsen without immediate and thoughtful action from all corners of the health care delivery system. The proposed review of rates, with an eye toward justifying increases above a certain cap for insurers and providers, can effectively slow the growth of health care costs in the short term. To be clear, Governor Patrick indicated that this is a temporary measure.

Finally, the governor’s proposals require the Division of Insurance to review data insurers use to justify their proposed rate increases, and requires the Division of Health Care Finance and Policy to do the same for health care providers. This is a long way from imposing “arbitrary price controls’’ on the health care marketplace. Rather, it provides transparency and a needed check to what has been a perpetually rising stream of costs passed on to Massachusetts families and small businesses.

David Morales
Commissioner, Division of Health Care Finance and Policy
Joseph G. Murphy
Commissioner Division of Insurance Boston

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