On Thursday Massachusetts Insurance Commissioner Joseph Murphy rejected 235 of the 274 rate increases proposed by insurers for plans covering individuals and small businesses.
For several years Massachusetts law has allowed the commissioner to turn down health plan premium increases:
The subscriber contracts, rates and evidence of coverage shall be subject to the disapproval of the commissioner. No such contracts shall be approved if the benefits provided therein are unreasonable in relation to the rate charged, nor if the rates are excessive, inadequate or unfairly discriminatory. Classifications shall be fair and reasonable.Thursday, however, is the first time this power has been exercised.
It didn't take long for Governor Deval Patrick's likely opponents in the November election to interpret the action as a salvo in the campaign (for example, see this article in the Boston Globe). Charlie Baker, the likely Republican nominee, was CEO of Harvard Pilgrim Health Care for ten years, and took the company from receivership to solvency and rating as the top commercial health health plan five years in a row. President Obama has led the way in attacking the health insurance industry. Pundits speculated that the Governor wants to tarnish Baker's credentials before the election.
If Pogo Possum were with us he would start by asking what makes health insurance so expensive. He'd be told - "90% goes for medical services." Then Pogo would ask why medical services cost so much more than anywhere else in the world. The answer - "our prices are higher and our doctors do a lot of things that aren't needed." Pogo would be puzzled - how come Americans let this happen? "When insurance companies tried to manage care in the 1990s politicians and the public raised hell."
Pogo's conclusion: "We have met the enemy...and he is us." He'd tell us that trying to control insurance costs by (a) capping premium increases while (b) ignoring increases in the 90% that comes from provider charges and (c) vilifying insurers when they try to modify the cost trend is (d) folly.
Insurance Commissioner Murphy was totally correct in concluding that insurance costs are "unreasonable relative to the benefits provided," but his conclusion applies to the entire U.S. health system. We spend vastly more than other developed countries, have poorer health status and lower satisfaction with the system itself. "Unreasonable" is a mild term to apply to the U.S. system.
Here's what I think Pogo would advise:
"You folks in Massachusetts have all kinds of professors and analysts telling you why health care costs so much. All that wisdom hasn't done anything for you. Don't you know about the farmer and the mule? He asked the mule politely to plow the field but the mule just stood there. He reasoned with the mule but got nowhere. He complained to the neighbor who'd sold him the mule. The neighbor took a two by for and walloped the mule on the head. Then he whispered - 'it's time to plow the field' in the mule's ear. The mule went to work right away. The neighbor explained - 'I told you to be polite with him, but you have to get his attention first!' You folks in Massachusetts are like the farmer - you keep talking politely and reasonably, but the public isn't paying attention"In addition to whatever political campaign motives the Governor has, there's a chance that he's following Pogo's advice. Here's what the Governor said:
"We’re seeking to try to give some relief to working families and to small businesses. For a long time, policy makers have been defeated by the complexity of it, so what we’re trying to do is pierce through."As a "solution" to the health care cost spiral, capping insurance premiums is absurd. But as a two by four applied to the head of the body politic it just might "pierce through"!
I'm one of the many Massachusetts folks who've contributed thoughtful, polite analyses of the health system to our public discussion. Perhaps I should have gone to the lumber yard instead!