A Massachusetts court Monday ruled against health insurance providers seeking to raise their premiums 8 to 32 percent in a closely watched case.
Massachusetts enacted a universal healthcare plan in 2006 that includes politically controversial measures such as the individual mandate requiring all adults to purchase insurance. With opponents of the national healthcare legislation passed weeks ago promising legal action, the Massachusetts case was seen a foretaste of what could lie ahead.
In this instance, the court affirmed that, for now at least, the state has the authority to oversee the industry.
The challenge arose from a bid by health insurance providers in Massachusetts several weeks ago to raise their premiums. Massachusetts Insurance commissioner Joseph Murphy called the increases “excessive,” noting that the medical consumer price index – an indicator of how much medical goods and services cost – projected a necessary increase of only 5 percent. Mr. Murphy rejected 235 of 274 proposed rate hikes.
Six insurance companies sued, arguing the state does not have the regulatory authority to cap premiums. They said they would lose $100 million without the premium increase, plus even more in the administrative costs of having to redesign their plans.
In addition to the suit, the insurance companies filed a preliminary injunction to prevent the state from regulating their premium increases until the case is decided. They also asked for an expedited trial.
Suffolk Superior Court Judge Stephen Neel denied the request to expedite the trial and the injunction. He said that until the health insurance companies exhausted all available administrative remedies within the state Department of Insurance, the court had no jurisdiction. Only then could the insurance companies move through the normal legal process, he said.
He added that he wanted to avoid “stepping in the [insurance] commissioner’s shoes” and revising the regulations temporarily until the later court date.
Furthermore, the regulations did not cause “irreparable harm” because lost profits could later be recouped, Judge Neel said.