Massachusetts Insurance Companies have stopped issuing new policies today after the state insurance regulators denied their request for 2010 rate increases. The Non-Profit companies are stating that with the increase in the cost of care they will not have enough funds to cover their obligations. This policy freeze also includes employees for companies that would be coming out of the company's defined waiting period before they can receive benefits.
The State of Massachusetts has stated they will begin levying fines against the companies if they do not start issuing quotes to individuals immediately using last years rates.
Ultimately this will be decided by the courts and will not be over quickly. As the Massachusetts plan was touted as the model for the recently passed National Health Care Reform Bill everyone should pay careful attention to the problem in Massachusetts.
As a Massachusetts resident I can tell you that the insurance rates are incredibly high. My company provided health insurance plan cost me 137 dollars a week for a family plan. That was 40% of the total cost of the plan as my employer picked up the other 60%. That plan gave me a 250 dollar deductible per person, 25 dollar co-pay for a doctors visit and my prescriptions were 30 dollars for name brand, and 15 dollars for generic. Dental Insurance and Vision Insurance were separate programs so all said and done I forked over about 167 dollars a week for benefits.
If you make over 1000 dollars a week that may not seem very ridiculous. but if you are only making 500 dollars a week that is almost one third of your income. The Median family income in Massachusetts is about 58 thousand dollars. Based on the numbers above that is almost 15% of their income being spent on health insurance. to make matters worse many of the plans come with higher deductibles per person, and have higher premiums than the plan I just gave. When I was laid off we went to my wife's employers medical insurance plan and we pay over 200 dollars per week now.
But the problem is not the insurance companies. Massachusetts' own Attorney General (Martha Coakley, remember her?) recently came to the conclusion that the overall cost of Health Insurance had nothing to do with the Insurance Companies and their alleged corruption and greed, but rather the cost of insurance is becoming so high because the cost of care is spiraling out of control.
Furthermore Massachusetts has the same stipulations for people with pre-existing conditions in it's law as Obamacare does. Massachusetts insurance companies must insure everyone regardless of their current health status or pre-existing conditions and they have to charge everyone around the same price. This means they can wait until they get sick, or injured before they have to buy the insurance. Then when the don't need it anymore they drop it.
Blue Cross Blue Shield of Massachusetts reported a week ago that on 2009 alone they had 936 customers sign up for insurance and stayed on for only three months or less with their monthly claims averaging over two thousand dollars per month.
Likewise last summer Charlie Baker who is the Republican front runner for governor detailed that between April 2008 and March 2009, about 40% of its new enrollees stayed with it for fewer than five months and on average incurred costs about 600% higher than the company would have otherwise expected.
This means that to maintain the obligations they insurance companies have to pass on those costs to everyone equally since they are not allowed to charge the people who are essentially gaming the system any more than they charge the people who have been paying into it for years.
The irony here is that Massachusetts used to regulate the auto insurance industry in much the same way that they are regulating the health insurance industry now. They finally had to stop and deregulate it when there were only about three companies who were willing to write policies in the state. Since they have lifted much of the previously imposed restriction there is actually competition in the state and rates have steadily decreased year after year.
So get ready America, pretty soon the only choice we are going to have for our Health Insurance is going to be the United States Government.
Better get your papers in order.