Chaos in the Massachusetts Health Care Market


Want a preview of ObamaCare in action? Check out the Massachusetts insurance market—which earlier this week entered a state of "market chaos" after Governor Deval Patrick denied a host of health insurance rate increases.

On Tuesday, the state's individual insurance market effectively shut down as insurers refused to comply with the state's rejection of 235 of 274 proposed health insurance rate increases.

The dispute has already put the two sides in court. Insurance companies are now claiming that the rejected rate increases mean they won't be able to operate at a profit, and arguing that no actuary would approve the sort of rates that state insurance regulators say they expect. Actuary sign-off is not only important for fiscal stability—it's a legal requirement in the state.

Is this just insurance company posturing? It's entirely possible. Industries, entirely understandably, are bound to put up a fight when told they can't set their own prices. That means making the toughest claims they think they can get away with. But it's not unbelievable that the combination of rate caps and increased regulatory burdens is imposing what amounts to an impossible strain on private insurers.

A judge is expected to rule on the dispute by Monday. But given that the Affordable Care Act was sold in part based on the argument that it expands government authority to review insurance rates, I think it's safe to say that this fight is just beginning.

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  1. Show us the way, Massholes.

    1. A baseball bat up every Masshole.

  2. The answer is easy. Make all health insurance companies non-profit by law. They they’ll be tripping over each other to provide us all with free health care, once that pesky profit motive is out of the way.

    1. The answer is easy. Make all health insurance companies non-profit by law.

      Around half the people who have health insurance, have it from a non-profit already.

      1. Not to mention more and more non profit hospitals. The one they built in my town about 7 years ago is expanding, again. With the help of state and federal grants, of course.

      2. See? The solution to the problem is to go full retard whole hog! More is better!

        1. I believe something like 88% of policies in MA are issued by nonprofits.

          1. I believe 88% of Reason readers are immune to sarcasm.

    2. This post was supposed to go here.


        1. Most of us can figure it out.

    3. “Make all health insurance companies non-profit by law.”

      They already do that in Minnesotta

    4. This comment represents a confusion. “Non-profits” can make a profit — or a loss. The point is, if it costs more to provide the insurance than can be recouped then the pile of dollars in the coverage fund will dwindle, leaving policy holders effectively uninsured EVEN IF the provider is a “non-profit”.

      1. Unfortunately, it’s a very common confusion among most Americans today, or at least those who blame the insurance companies, and not government geniuses who screw things up for sport, for today’s system.

      2. Yes unlike the federal government an entity cannot continue to loose money and exist(do it’s job)
        So, make a profit(resonable) or out of business make up your mind!
        Which ever you prefer.

    5. As a physician, I will happily work for free, just as soon as every lawyer works 100% pro bono, just as soon as our writer-in-chief gives his stupid books away for free, and just as soon as everything else in the world is given away for free.

      Forward, comrades. What could go wrong?

      1. You may say I’m a dreamer, but I’m not the only one. I hope some day you will join us, and the world will live as one.

        1. that was stupid.

        2. With the same aspirations & desires? God I hope not!

      2. You could show us the way and put yourself in front instead of as the final piece.

    6. Jaysus. Do you even understand the meaning of “non-profit”? Non-profits still have to have more money coming in than going out. Otherwise they won’t stay in business.

      That money can be revenue from selling a good or service, or grant money, etc. But revenue must still be higher than expenses, or eventually the doors will close.

      I’d like to buy a clue for $200….

      1. Yes dog, yes. And let us also understand that being under no obligation to make money leads to waste and corruption and feather-bedding and nepotism of the highest degree.
        Non-profits are great for safely stuffing full of otherwise unemployable associated assholes, not so great for earnest young bleeding heart do-gooders trying to make a difference. Hahahaha to them.

    7. I hate to mention this but almost all the health insurance companies left in Mass are non-profits. It’s not the profit motive that stands in the way, it’s the fact that there is a limit on how long insurance companies, even non-profit ones, can stay in business when they spend more money than they take in.

    8. You’re making the assumption that the problem with the companies is their desire to make a profit. You’ve completely ignored organizational issues, conflicting policies, inefficient protocol and other abuses, not to mention conflicts with government regulation policies.

      There’s nothing wrong with making a profit. People need to make money, and progressive research is possible BECAUSE of large, very wealthy organizations.

      Rather, it is HOW money is made that ethics are called into question. Seriously, the solution isn’t as easy as “take their money away.” I dare you to look into this deeper. By working together we can fix this, but by sitting back and getting angry, nothing will get done, aside from brash decisions.

    9. Did it not occur to any of you that maybe sage wasn’t being entirely, you know, serious?

    10. All of the companies that had denied increases are not for profit— The for profit companies (a tiny portion of the Massachusetts market) had their rate increases approved

    11. They already are non profit. Even profit companies have profit margins of only 4 to 7%.

  3. Of course, their goal is to drive out private insurers, so big bro on a white horse can enter to save the day.

    1. I blame the racists in the Tea Party.

      1. I notice the Tea Party is so far slow to respond to this comment.

    2. “”so big bro on a white horse can enter to save the day.”””

      The Old Spice guy????

      1. So you think they all look alike, huh?


      2. “The Old Spice guy???

        No, the Marlboro man. Or was he on a black horse? I never can get that right. Oh, bother! Must have been the Lone Ranger.

  4. Looks like health care reform has done nothing, at least for 4 years. Its business as usual for health care. Stick it to the sheeple!


    1. Anon bot, you let me down this time.

      1. Anon bot has me perplexed. He/she/it is always sort of vaguely, remotely on-topic, but never quite makes sense.

        1. Mr. Turing would not be perplexed.

          If the day comes when anonymity bot makes sense, run for the hills because SkyNet will launch our nukes about ten minutes after that happens.

          1. I want the code that runs anon-bot. It can replace the MSM.

  5. Not just the classic “market failure” but the even more craptacular “MARKET CHAOS”.

    1. Dogs and cats living together, mass hysteria!

  6. big bro on a white horse


    1. Double racist.

      1. Fucking amateurs.

  7. I know this is pure fantasy, but I hope that the insurance companies close up shop and leave.

    1. I was hoping years ago that the detroit three would refuse to sell cars in CA. Also pure fantasy.

      1. I also hoped the tabacco CEOs would announce that they just stopped making cigarrettes before the committe meeting so the congress critters would crap their pants at the thought of less $ to blow.

        1. before the committe meeting so the congress critters would crap their pants at the thought of less fewer $ to blow.


          1. Depends on whether $ is meant to mean “dollars” or “money”.

        2. “””I also hoped the tabacco CEOs would announce that they just stopped making cigarrettes before the committe meeting so the congress critters would crap their pants at the thought of less $ to blow.””

          Same here. I would love it if they announced they were pulling out of the American market. It would screw up most city and state budgets.

    2. They already are closing up shop. You can’t buy certain types of policies in Massachusetts right now from most insurers.

      The leaving part will follow if the state keeps insisting they sell policies at a loss.

      1. “””They already are closing up shop. You can’t buy certain types of policies in Massachusetts right now from most insurers.”””

        Come on, did you RTFA? They are not closing up shop. They feel they can’t take anyone else until the rate disupte is resolved. That’s not closing up shop at all. Now, if the rate dispute does not resolve in their favor, it will be interesting to see their next step.

    3. Pure fantasy for who? That’s actually the left’s wet dream.

  8. But… why can’t they just accept operating losses like good little companies? The government the bureaucrats manage has operating losses every year, why not the companies they now manage as well?

  9. Price controls lead to shortages? Wow, what a discovery! It’s truly amazing how governments have to continually rediscover basic economic concepts.

    1. I highly recommend “Wages of Destruction” (Adam Tooze).
      It’s an examination of the German economy prior to and during WWII. For all his power (and he ranted about ‘the state not being held hostage by economic theory’!), Hitler ended up constrained by exactly the same laws as Massachusetts.
      Godwin! Godwin! etc….

  10. <Democrats>
    This is why only single-payer will work.

    1. The plan continues to move along on schedule…

      Step 1: vilify the insurance companies
      Step 2: price fix because the villains are being jerks
      Step 3: take over the ins. cos. that are losing $$ hand over fist
      Step 4: ???
      Step 5: Profit!!!

      Although, I think this is all part of a larger conspiracy to develop a portfolio of the crappiest companies (starting with GM) to better justify tax increases…

  11. “…arguing that no actuary would approve the sort of rates that state insurance regulators say they expect…”
    Well, they will just do what Florida does with hurricane insurance – underprice it and than have the taxpayer pick up the tab (poor inlanders subsidizing coast dwellers – sooo progressive). Of course, underpricing the insurance causes more building on the shore, of more expensive houses, more claims, ad nauseum. Same thing with medical care.

  12. Fack! No wondah they wouldn’t take my fackin’ insurance cahd over at fackin’ Hahvahd the othah day. This is a fackin’ pissah!

    1. Pure verbal repugnance with Twain-like accuracy. Nice work

  13. Reason has really been working California and Massachusetts over like punching bags recently. Are these two just that much worse than anywhere else in the world, or do you folks need to hire more staff?

    1. Yep, we are much worse, hate-to-say-it.

      1. I’ve lived in both states in the past few years, and yes, I’d have to say CA is much worse right now.

      2. MA, though, isn’t even the most f’ed up state in New England (that would have to be Rhode Island).

        1. Nobody goes there anymore.

          1. American Psycho reference or coincidence?

        2. I think RI floated away the other week.

          1. No, too many people went there and it capsized.

          2. No, too many people went there and it capsized.

          3. No, too many people went there and it capsized.

            1. You can say that again.

          4. Three times, in fact.

          5. Rhode Island is neither a road nor an island.


            (P.S. Proud Masshole here. Proud in the sense that I was right about Deval Patrick and can now gloat to all my liberal friends.)

            1. Oops, forgot to mention that I was also right about Mitt Romney and can now gloat to my conservative friends. “Health care reform” in Massachusetts was Romney’s puppy.

              1. Romney is absolute toast with the GOP base and he had best accept it and drop his national aspirations.

    2. “Are these two just that much worse than anywhere else in the world”


      1. I was just on the phone with Great Britain, New Jersey, Venezuela, Ohio, Michigan, and New York. They said to tell you to give them more credit.

        1. Don’t get me started on New York. It’s hard to find old budget figures, but the best I could find suggested that right-wing whackjob Mario Cuomo’s final proposed budget was just over $60B. Adjust that for inflation and population growth, and you get something around $95B. The actual budget is something closer to $130B. And still, the government sector union thugs claim there are “painful” “cuts” that will kill our children and old people.

          I think I’ve mentioned before that Mom’s a retired teachers’ aide. She still gets the union propaganda rag, which routinely has stories about the “cuts”, all of which basically say that some district will see a “cut” of some randomly selected number. They never give the total budget figures, though, so we can see for ourselves how much of a “cut” there really isn’t.

          And all this is without even mentioning the corruption of the people elected since the last election cycle in 2006, from Wicked Eliot Spitzer on down.

          1. Yeah, New York is near implosion. Paterson’s got two ideas I’ve heard for balancing the budget: kindly asking the public sector unions to forgo their promised 4% raise this year, or sticking it to smokers once again. (They don’t even pretend sin taxes are sin taxes anymore.) Guess which one of these two ideas will become reality.

      2. for realz. the federal stimulus money we were given was barely enough to change our colostomy bag.

    3. IIRC the other day they had something about how Maine’s disastrous foray into government health care. Also TennCare! That was disastrous too.

      Huh, what a funny coincidence!

    4. The two most egregious examples of the negative effects of government meddling-that’s all.

      If they wanted some historical comparisons, Reason could have examined the results obtained in WA state when we forced insurance carriers to accept anyone regardless of pre-existing condition. The same thing happened here as is happening in MA: first rate increases were denied, then no new subscribers. We were on the path of existing individuals losing their insurance as the companies withdrew from our market. Which would have increased the number of uninsured–surprise!

    5. Mississippi takes some serious abuse as well. Also Ohio gets a gentle ribbing from time to time, probably due to The Jacket’s residence there.

  14. Release propaganda hounds? Check.
    Pass ObamaCare? Check.
    Watch insurance rates rise anyway? Check.
    Proclaim the failure of free markets? Check.
    Nationalize health care? Working on it.
    Rationing? Racist!

  15. Why does Mr. Boyle keep looking at me like that? Every time he talks about ‘history in the making’, or gives one of his social justice speeches he stands on his tippy toes to look over that big headed girl in front of me to see if I’m listening. It’s as if he is trying to ‘reach out to me’. God, that’s so creepy. Shit. I just got it. I’m the only black kid in this class. Fuck me. Well, maybe if I nod every time he quotes Martin Luther King and play along I’ll get an easy ‘A’ on that test coming up. Who am I kidding, this jackass would not know how not to give me an ‘A’. When is Ms. Stevens coming back from maternity leave?

    1. Bravo.

  16. I also love how this story is getting approximately zero coverage from the local media here. Our news has basically been (a) Tiger Woods at the Master’s and (b) the South Hadley High School story for the past 2 weeks.

    1. You’ll get what you get and like it!

      1. Thatnk you, Mass Media. May I have another?

        1. Bend over, biotch.

    2. Today on WBUR (local NPR) I heard that newly-employed Mass resident so-and-so couldn’t buy insurance, and that the evil insurance companies were holding this poor person “hostage” by not selling their insurance at the govt-capped rate.

  17. “Want a preview of ObamaCare in action? Check out the Massachusetts insurance market…”

    Well part of what ‘ll make ObamaCare work, where it didn’t in places like Massachusetts, is that ObamaCare is a national program.

    Once we’ve killed all the geese in every state, and not just the ones in Massachusetts, they’ll have to keep laying golden eggs!

  18. Th only option is to turn Mass. Care into a single payer system.

    1. Absolutely. Once again the market has let us down.

    1. All government policies can be defined to work. It just depends on what your goal is. If your goal is to destroy the production of a particular good, use price controls and set the mandated price too low. It works like a charm.

      1. No dog, no. The Prog goal is employment for reliably Democrat voters. That is all. In the Prog world, gov does not fix problems, it provides jobs for friends and voters.

  19. Tomorrow’s Boston Globe:

    “Health Care Hole-in-One: Governor Stands Up to Insurance Bullies.”

    Happy now?

  20. The newly elected governer of NJ intends on doing the SAME THING:

    That is, cut funding directory towards the municipalities to lower State taxes AND prevent the municipalities from raising property taxes.

    I can’t wait to see it.

    1. Me either. Where will those bureaucratic microbes go?

    2. Alice,
      That is NOT the same thing. Not even remotely. Christie is doing that with the specific intention that services and runaway pensions will be cut so the government can attempt to reach fiscal solvency without boosting tax rates. He’s basically forcing spending cuts to reduce the deficit as opposed to increasing taxes.

      Patrick is telling a private company they must increase or maintain their provision of services (by law and threat of prosecution) while disallowing them to increase prices to cover their increased costs (by law and threat of prosecution). Thus in essence it is a government mandate to increase their debt in order to cover the higher costs and the inability to reduce services.

      The government might be able to run such a model until the point it reaches fiscal disaster (see also: New Jersey), but no business would stay in business under that model.

  21. So unexpected
    Some adverse consequences
    Rain falls in the woods

    1. This is the first proper haiku I have seen in years. Nicely done.

  22. P. Brooks,

    Question: Who will the Boston Globe endorse for Prez in 2012?

    Answer: The question is irrelevant because the Boston Globe will have folded by then.

  23. I laughed and laughed when Sulzberger made the Globe eat $10mm in salary cuts to stay open, and then paid the $10mm saved to his own self. You go, Pinch!

    1. Redistribution of wealth!

  24. How hard is it to look at the books and see if they are making a fair profit of say 10% and go from there?

    1. You must not be a progressive because 10% profit is pretty good. Exxon/Mobil’s profit margin is only 6.69% and they get crucified.

    2. Hahahaha, what a maroon. There is no business in the world that wouldn’t kill to make 10%.
      Get a job.

    3. 10%. AHAHAHAHAHA. In their very best years, health insurers are lucky to get a 4% margin. Most years, its somewhere between 2% and -1%.

  25. The incremental collapse of privately run insurance is an intended “feature, not a bug” in the eyes of the Left – it is a stage managed “evolution” to single-payer that allows one last torching of the privately held straw man.

    Look at what Obamacare does – it imposes a large number of expensive mandates that will of necessity drive premiums up even faster than they have been.

    At which point, saviour government can ride up, crucify the private malefactors and ride off with what it always thought was “right” – single payer.

    As usual, kabuki government.

    1. Wipe out insurance companies, check.
      Insurance employees become unemployed, check.
      Newly unemployed become dependent on gov’t services, check.

      More votes for Dems!

      1. You stole my wet dream.

    2. “The incremental collapse of privately run insurance is an intended “feature, not a bug” in the eyes of the Left – it is a stage managed “evolution” to single-payer that allows one last torching of the privately held straw man.”

      Heh…sounds exactly like what was done to the public school system.

      Federalize it to take it over, and then run the fucker into the ground while throwing tons of money at it.

      The schools suck so hard that not even the Alleged Hawaiian will send his own daughters to the local public school system.

      The idea is to compel people to pay for “services” that they don’t want to use.

      One day, when we hang them all, I am really going to enjoy their little one-sided “Q&A session” up on the scaffold as I tighten the noose around their necks.

      “But WHY are you doing this? I’m a PUBLIC SERVANT”

      …cough, gasp, choke.

      Thereafter follows the drip-drip-drip as their urine dribbles down their legs.

  26. At some point someone will think “oh all of this could be fixed if only we let the insurance companies refuse to cover pre-existing conditions.”

    One can dream.

  27. Hot Breaking News: Federal Government announces plans to re-open the Mustang Ranch . . . IRS to manage and hire additional personnel to operate and maintain services . . . will be operated as a Non-Profit Organization.

  28. All of the insurance companies involved in the present Massachusetts complaint are non-profit organizations.

  29. It already takes 3 months to see a specialist in Mass, shortages anyone?

    1. Why can’t you just go to Connecticut or New Hampshire?

      1. Because THEY expect to be paid, in cash, for services rendered.

        1. Wouldn’t it be funny if everyone started going to another state to get treatment?

          One of many possible absurd outcomes of HCR.

      2. If you mean “go to see a doctor and then go back home to MA”, what Bilge and RC said. If you mean “move permanently to NH or CT”, that’s exactly what the mobile among them are doing in droves. Elderly and/or poor people don’t really have that option.

    2. Because your Mass policy probably doesn’t have Connecticut or New Hampshire specialists in its network.

  30. Are people really so ignorant as to not understand that insurance is expensive because doctors, drugs, MRIs, etc are expensive?

    The solution here isn’t a bunch of new reactionary regulations and the prohibition of profit.

    Instead, take the rare opportunity to use the Commerce Clause as intended and tear down state regulations and permit individual purchase across state lines.

  31. No, cars127-san: sepuku government. Big fucking scalpel (disinfected), rubber gloves on hands, Baby Boomer pony-tail in a blue plastic hair net. Insert fully and eviscerate. No more doctor-san. No more politician-san (sans politician?). Collapse-san.

  32. From Section 2718 of “ObamaCare:”

    `(b) Ensuring That Consumers Receive Value for Their Premium Payments-
    `(A) REQUIREMENT- Beginning not later than January 1, 2011, a health insurance issuer offering group or individual health insurance coverage (including a grandfathered health plan) shall, with respect to each plan year, provide an annual rebate to each enrollee under such coverage, on a pro rata basis, if the ratio of the amount of premium revenue expended by the issuer on costs described in paragraphs (1) and (2) of subsection (a) to the total amount of premium revenue (excluding Federal and State taxes and licensing or regulatory fees and after accounting for payments or receipts for risk adjustment, risk corridors, and reinsurance under sections 1341, 1342, and 1343 of the Patient Protection and Affordable Care Act) for the plan year (except as provided in subparagraph (B)(ii)), is less than–
    `(i) with respect to a health insurance issuer offering coverage in the large group market, 85 percent, or such higher percentage as a State may by regulation determine; or
    `(ii) with respect to a health insurance issuer offering coverage in the small group market or in the individual market, 80 percent, or such higher percentage as a State may by regulation determine, except that the Secretary may adjust such percentage with respect to a State if the Secretary determines that the application of such 80 percent may destabilize the individual market in such State.
    `(i) CALCULATION OF AMOUNT- The total amount of an annual rebate required under this paragraph shall be in an amount equal to the product of–
    `(I) the amount by which the percentage described in clause (i) or (ii) of subparagraph (A) exceeds the ratio described in such subparagraph; and
    `(II) the total amount of premium revenue (excluding Federal and State taxes and licensing or regulatory fees and after accounting for payments or receipts for risk adjustment, risk corridors, and reinsurance under sections 1341, 1342, and 1343 of the Patient Protection and Affordable Care Act) for such plan year.
    `(ii) CALCULATION BASED ON AVERAGE RATIO- Beginning on January 1, 2014, the determination made under subparagraph (A) for the year involved shall be based on the averages of the premiums expended on the costs described in such subparagraph and total premium revenue for each of the previous 3 years for the plan.
    `(2) CONSIDERATION IN SETTING PERCENTAGES- In determining the percentages under paragraph (1), a State shall seek to ensure adequate participation by health insurance issuers, competition in the health insurance market in the State, and value for consumers so that premiums are used for clinical services and quality improvements.
    `(3) ENFORCEMENT- The Secretary shall promulgate regulations for enforcing the provisions of this section and may provide for appropriate penalties.
    `(c) Definitions- Not later than December 31, 2010, and subject to the certification of the Secretary, the National Association of Insurance Commissioners shall establish uniform definitions of the activities reported under subsection (a) and standardized methodologies for calculating measures of such activities, including definitions of which activities, and in what regard such activities, constitute activities described in subsection (a)(2). Such methodologies shall be designed to take into account the special circumstances of smaller plans, different types of plans, and newer plans.
    `(d) Adjustments- The Secretary may adjust the rates described in subsection (b) if the Secretary determines appropriate on account of the volatility of the individual market due to the establishment of State Exchanges.
    `(e) Standard Hospital Charges- Each hospital operating within the United States shall for each year establish (and update) and make public (in accordance with guidelines developed by the Secretary) a list of the hospital’s standard charges for items and services provided by the hospital, including for diagnosis-related groups established under section 1886(d)(4) of the Social Security Act.’.

  33. This is so UnAmerican.

    If we’re going to do this, why don’t we (the Government) just bring back slavery. Have the government force us to work and just decide how much they are going to give us for money.

    1. Uhhh, I don’t know how to break this to you, but the plastic ObamaCare tag stapled through your earlobe should be your FIRST clue.

      See, the individual mandate for you to obtain and maintain a 3rd Party maintenance agreement on your body under threat of state sanction is effectively a Lien upon you.

      And since you don’t place Liens on people, but rather upon property…well…you are now essentially Federal livestock.

      When you think of ObamaCare, think of a herd of beef cattle contentedly grazing in a lot next to a McDonald’s franchise.

  34. Why don’t everyone grow up and see that the United States is becoming a social capitalist. Everyone wants something for free and the quote rich pay. The problem is the “rich are running out of money’. The rich supplies the jobs, they pay taxes; if there is in increase in taxes they have only 3 options. Increase cost, lay offs or go out of business. Guess what? You just lost your job, and any benefits including health care.
    By being a non-profit insurance company, like one suggested; means you can not have a profit and break even on your balance sheets. Most non-profits like a 10% loss to keep the nonprofit status by I.R.S. rules.
    Why not simplify everything and get rid of the I.R.S. Vote for the “Fair Tax Act”. Eliminate minimum wage and let the free market establish the pay. Reform tort laws. If someone sues and fails, they pay.Too much money is being spent for tax preparations and lawyers. Reform starts from less government, law reform

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