THE MASSACHUSETTS INSURANCE BLACKOUT

April 9, 2010

This week it became impossible in Massachusetts for small businesses and individuals to buy health care coverage after Gov. Deval Patrick (D) imposed price controls on premiums.  Under ObamaCare this kind of political showdown will soon be coming to an insurance market near you, says the Wall Street Journal. 

The Massachusetts small-group market that serves about 800,000 residents shut down after Patrick kicked off his re-election campaign by presumptively rejecting about 90 percent of the premium increases the state's insurers had asked regulators to approve.  Health costs have run off the rails since former GOP Gov. Mitt Romney passed universal coverage in 2006, and Patrick now claims price controls are the sensible response to this ostensibly industry greed. 

Yet all of the major Massachusetts insurers are nonprofits, says the Journal: 

  • Three of largest four -- Blue Cross Blue Shield, Tufts Health Plan and Fallon Community Health -- posted operating losses in 2009.
  • In an emergency suit heard in Boston superior court yesterday, they argued that the arbitrary rate cap will result in another $100 million in collective losses this year and make it impossible to pay the anticipated cost of claims.
  • It may even threaten the near-term solvency of some companies, so until the matter is resolved, the insurers have simply stopped selling new policies.  

A court decision is expected by Monday, but state officials have demanded that the insurers -- under the threat of fines and other regulatory punishments -- resume offering quotes by today and to revert to year-old base premiums.  Let that one sink in, says the Journal: Patrick has made the health insurance business so painful the government actually has to order private companies to sell their products (albeit at sub-market costs). 

One irony, says the Journal, is that Patrick's own Attorney General and his insurance regulators have concluded -- to their apparent surprise -- that the reason Massachusetts premiums are the highest in the nation is the underlying cost of health care, not the supposed industry abuses that Patrick and his political mentor President Obama like to cite. 

Source: Editorial, "The Massachusetts Insurance Blackout; Insurers go on strike after Deval Patrick imposes price controls," Wall Street Journal, April 9, 2010. 

For text:

http://online.wsj.com/article/SB10001424052702304198004575171782805022028.html

 

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