Massachusetts rethinks outdated rate-setting process

Lawmakers in Massachusetts are taking a new look at how they set rates for health insurance plans, which nearly all residents are mandated to carry (or face a tax penalty) as of 2006.

The affordability formula the Massachusetts Health Insurance Connector Authority board uses currently is derived from income data and the cost of health insurance plans available in each region. But with premiums rising higher than residents' incomes, several board members suggested yesterday that it may be time for a change.

One possibility is to link the formula to the percentage of income a resident is paying toward health insurance, similar to the approach proposed by President Obama and the U.S. Senate. Historically, board members have resisted loosening the regulations because doing so would require fewer residents to carry health insurance, according to the Boston Globe.

For now, the board voted to make only modest tweaks in this year's formula for people who make more than three times the federal poverty level, which translates to $32,496 annually for an individual.

Rates for those receiving subsidies through Commonwealth Care or obtaining coverage through their employers are unlikely to have their rates change this year.

In Virginia, legislation allowing its citizens to avoid any federal mandate to buy health insurance or participate in a particular healthcare system recently was approved. Including Virginia, 38 states have similar 'nullification' bills pending, or plan to introduce legislation based on the American Legislative Exchange Council's (ALEC) model Freedom of Choice in Healthcare Act.

To read more about possible changes in Massachusetts law:
- read this Boston Globe article