Mass. ballot Question 2 may overhaul dental insurance premiums [masslive.com]

Massachusetts residents can vote to nix potential administrative waste on their dental insurance premiums through a ballot referendum this November, but a new analysis warns consumers may not necessarily see a major impact — even if the question succeeds at the polls.

Question 2 on the general election ballot asks whether voters support requiring dental insurance carriers to spend 83% of premiums on patient care, not on administrative expenses, taxes or profits. If carriers spend less than 83 cents on every dollar of monthly subscriber premiums — a threshold known as a loss ratio — they must send rebates to insured individuals and groups.

But it is difficult to gauge whether the loss ratio is pegged at the correct amount, as well as what impact it could have on dentists and patients, according to a report released Thursday by the Center for State Policy Analysis at Tufts University’s Jonathan M. Tisch College of Civil Life.

“This ballot question is built on relatively thin information,” the report shared with MassLive states. “It’s not clear whether dental insurers are currently close to — or far from — the proposed 83 percent requirement. Indeed, there’s no clear basis for the 83 percent figure, and imposing it would make us the only state with a fixed loss ratio for dental insurance.”

Put differently, the report postures there could either be “some relatively small” or “some potentially more substantial” and dramatic outcomes from the ballot referendum, depending on the validity of scant research to date.

The updated dental insurance provision would take effect in January 2024.

The report, which does not take a stance for or against the ballot question, notes instituting a dental loss ratio echoes a commonplace standard for medical insurance. In Massachusetts, medical insurers must meet an 85% or 88% ratio, but they’re also given more flexibility than dental insurers would have to comply with state regulations.

Hefty medical insurance premiums are also predicated on higher risk calculations, unlike cheaper dental insurance premiums that take into account lower risks and stricter “usage limits.”

“When crafting loss ratios for medical insurance, lawmakers and regulators were guided by copious information about market dynamics and the financial health of insurers,” the report states. “There is no similar information about the current finances of dental insurers in Massachusetts. The one relevant study being circulated uses sound methods but was commissioned by a national trade group for dental insurers.”

That study, commissioned by the National Association of Dental Plans, found most large insurance plans are already in the ballpark of the ballot referendum, with their loss ratios hovering around 80%. To add 3 percentage points, insurers would need to lower monthly premiums or streamline their operations to slash administrative costs or profits, according to the Tufts report.

In another option, insurers could pay more in dental claims, such as enabling dentists to bill more for their procedures. That, in effect, may give dentists more negotiating leverage as insurers simultaneously strive to meet their new loss ratio requirement.

But it could also make patients pay more for their dental care.

“One reason is that most dental insurance includes fairly high co-insurance rates, where the patient pays a percentage of the total cost,” the report states. “Another is that with higher prices more patients will hit their annual maximum — and need to pay for any additional care with their own money.”

The report cushions that scenario, though, by predicting price increases “should be limited.” The ballot referendum also “probably won’t trigger the kind of big, premium reductions that could make insurance more affordable,” the report states.

A voter information guide from Secretary of State Bill Galvin’s office contains a starker warning about the ballot question. An opposing perspective from Louis Rizoli, of the Committee To Protect Public Access To Quality Dental Care, claims thousands of Bay Staters would lose their dental insurance.

“With consumer prices soaring, we don’t need a new regulation that will increase costs and decrease choice,” Rizoli wrote.

Still, the ballot question could spur a more transparent insurance market, paving the way for “more deliberate policy adjustments moving forward,” the report states. Dental benefit plans would need to comply with regular reporting requirements, like disclosing their loss ratio and administrative expenses to the commissioner of the Massachusetts Division of Insurance.

The Committee on Dental Insurance Quality, which supports the ballot question, said Delta Dental paid $382 million on executive bonuses, commissions and payments in 2019 in Massachusetts, while spending $177 million on patient care, according to the state’s voter information guide.

Should the ballot question pass, the Massachusetts Legislature could adjust the loss ratio and manage its implementation, perhaps deploying a gradual approach to reach 83%.

“If voters reject this ballot question, the status quo will continue, which means dental insurance companies will maintain their current balance of premiums and prices,” the report states. “At the same time, there will be no reporting changes or broad improvement in our knowledge of the underlying finances of dental insurers in Massachusetts.”

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