NADP: Ameritas, Principal to leave Massachusetts small-plan dental market

Two more dental insurers have indicated they will withdraw from the small-plan market in Massachusetts, citing a successful voter referendum mandating the amount of revenue the companies must spend on patient care.

Ameritas Dental Network and Principal dental insurance have both notified the National Association of Dental Plans, of which they are members, of their intention to abandon the Massachusetts small-plan market. The president of the NADP spoke about the news on a call Friday with the National Council of Insurance Legislators.

The moves by the insurers follows the announcement in August by Guardian Life Insurance, one of the nation’s largest mutual insurance companies, that it had notified small businesses in Massachusetts that it will no longer provide dental insurance as a result of the ballot question that requires insurers to dedicate 83% of revenue from premiums be spent on patient care.

Insurers had warned consumers during the run-up to the November referendum that companies might flee the state if the provision passed. But backed by the American Dental Association and local dentists, the ballot question won handily bringing dental insurers in line with health care insurers that are required by Obamacare to allocate 83% from premiums to patient care.

On Tuesday, the Massachusetts Division of Insurance issued proposed finalized regulations on the so-called MLR requirements, which apparently prompted the two insurers to quit the small-plan market in the state. A comment period is open for the regulations which are supposed to go into effect Jan. 1.

Insurers have long argued that the MLR requirements would force the companies to cut back on product innovation and other expenses to the point that the small group insurance market would no longer be profitable.

More to leave small-plan dental market?

Mandating a minimum medical loss ratio “will inevitably create scenarios in which some plans cannot participate in some insurance markets,” said Mike Adelberg, executive director of the National Association of Dental Plans. Adelberg says he expects more companies to also withdraw from the Massachusetts small business market.

“Companies are going to make their own decisions, but there is a good chance of additional withdrawals,” Adelberg said.

Consumer advocates and dentist groups, including the American Dental Association, have said the Massachusetts referendum was a bellwether for such initiatives nationwide. However, attempts to pass similar MLR regulations in other states so far have come up short. Several states, including Maine, Colorado, and Arizona, have adopted halfway measures, requiring the insurance companies to publicly report their medical loss ratios, something that traditionally wasn’t done, and submit to remediation should regulators believe it is necessary.

Authors of the Massachusetts law chose what insurers say was an arbitrary figure of 83% and requires the companies to rebate premiums to policyholders if they don’t meet the loss ratio requirements.

Ameritas, based in Lincoln, Neb., and Principal, based in Des Moines, Iowa, did not respond to inquiries about the matter.

Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].

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Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].