2023 HSA/HDHP and MA PFML Changes
October 20, 2022
Report: Kaiser Family Foundation Employer Health Benefits 2022 Annual Survey
November 9, 2022Many of our Massachusetts-based clients have asked us for our thoughts on Ballot Question #2. Taking a strictly non-political stance, here are some general Q & A’s on the question:
Q. What is the ballot question generally proposing?
A. It would generally require that dental insurance carriers meet a minimum loss ratio of 83%. This means that of every premium dollar a carrier receives from clients, it must spend at least 83 cents on dental care, leaving 17 cents for administration expenses.
Q. What do the carriers pay now towards claims versus administration?
A. It varies between carriers and size of dental plan, but we generally see the carriers target from mid 60s to mid 70s loss ratios.
Q. Who raised this ballot question, and why?
A. Dentists raised the ballot question. It started with a single orthodontist in MA funding this effort, and it has since gained support from state and federal dentist associations. The dentists say this is needed to lower excessive carrier profits, though we believe a primary motivation is to increase dentist reimbursement levels.
Q. Is this happening in other states?
A. No other state has this kind of rule in place for dental plans. But we believe the national dentist association is supporting this so that the idea can be exported to other states.
Q. So why wouldn’t we support this?
A. Well, the idea sounds great on the surface. But the challenge is going to be that in order to meet that higher loss ratio, we believe some dental insurance carriers will raise their reimbursements to dentists, and then raise the dental insurance premiums accordingly to meet the 83% and also cover their own administrative costs. The largest dental carriers, particularly those with medical plan arms, can perhaps reach the 83% without too much impact, but the smaller carriers may be squeezed and more likely forced to raise prices further or exit the market. Either way, while we believe dentists will get paid more, we unfortunately do not foresee better or less expensive dental coverage for our clients resulting from this ballot measure. This is based on our deep understanding of the insurance industry and how care is carried out.
Q. What do you think is going to happen with the vote?
A. All the polling seems to show that this will pass. And then it will go to the legislature to work on implementation. We believe there is a need for the legislature to get involved, as this topic has many types of actuarial presumptions to be studied, with all sides presenting their data and allowing the legislators to make reasoned recommendations for implementation.
Q. Where can I read more?
A. The Boston Globe editorial board just released its position in favor of the measure. Our President, Eric Gulko, was on a recent call with those editors to provide some perspective from the employer point of view. You will see evidence of this in their analysis. While they ultimately support the measure, they bring up several important points about the complexity of this issue, which hopefully will be addressed by the legislators if the measure passes.
Read the Boston Globe article
Read the dental industry’s position opposing the measure and warning of unintended consequences.