Gov. Deval Patrick scored a major election-year victory today when a judge denied a plea by Massachusetts health insurers for a temporary injunction against a cap Patrick ordered on premium hikes for small businesses and individuals.
Suffolk Superior Court Judge Stephen E. Neel didn’t rule on the legality of Patrick’s rate cap. Instead, he said the financial harm claimed by the six health insurance providers who brought suit is not enough to bypass the administrative appeals process laid out in the law and Patrick’s two-month old dictate limiting rate increases to medical cost inflation.
“What the plaintiffs in effect request is that the court, at this early stage, approve . . . the rate increases which the plans seek to charge small group and individual subscribers,” Neel writes in his decision. “After hearing, and review and consideration of the memoranda, affidavits, and other materials submitted, the court declines to grant the plaintiffs’ request, and instead directs plaintiffs to exhaust their administrative remedies before seeking judicial relief.”
The six health plans filed suit last week after Insurance Commissioner Joseph Murphy denied 235 of their 274 requested rate hikes on April 1. The Division of Insurance has had the power to disapprove rate increases since 1976 but it had never exercised that power before.
“It’s a welcome decision for small businesses and working families who need immediate relief from excessive and unreasonable increases in their health care costs,” Patrick said in a statement.
The judge’s decision gives Patrick at least a temporary win on the politically explosive issue of controlling health care costs. Patrick, who is locked in a tough battle for governor against former Harvard Pilgrim CEO Charles Baker and state Treasurer Timothy Cahill, has filed legislation that would give his administration the power to regulate health provider charges and also ordered health insurance plans to submit any proposed premium increases 30 days before they take effect. Patrick said any insurance rate hikes above the medical consumer price index would have be reviewed and denied if found to be excessive.
The health plans who brought suit argued the rejection of their rate requests would cost them at least $100 million and could push some of them into insolvency. Several of the health plans say they lost money last year. The six plans that filed suit were Blue Cross Blue Shield of Massachusetts, Tufts, Harvard Pilgrim Health Care, Fallon Community Health Plan, Neighborhood Health Plan, and Health New England.
