BOSTON — A November vote calling for spending limits on dental insurance companies could force smaller providers out of the state and leave consumers with fewer choices, according to a new report.
Question 2 of the November 8 vote, if approved, would require dental insurance companies to spend at least 83% of every dollar they receive on “expenses and quality improvements” rather than administrative costs.
The report from Tuft’s University’s Center for State Policy Analysis indicated that while most large dental insurers would likely be able to meet the proposed requirements, smaller providers would face increased financial pressures.
“These types of plans may struggle to meet the 83 percent standard,” the report’s authors write. “Some may need to completely revamp their funding (possibly increasing both premiums and prices); Some may even exit the market, leaving Massachusetts consumers with fewer choices.”
The report found that self-funded plans — like employer-managed dental insurance pools — are not subject to the proposed 83% loss rate and could provide an “exit hatch” by offering alternative coverage if some providers exit the market.
Overall, the report says that recent studies suggest many of the largest insurance plans already have loss ratios approaching 80%, which would make compliance with the proposed requirements “manageable” for their companies. It suggests that the impact on most dental premiums would be negligible.
“If true, consumers are unlikely to receive rebates from Question 2, and if they do, those rebates would likely be small,” the report’s authors wrote.
The report’s author did not comment on whether voters should approve Question 2, but said its passage “would shed useful light on the dental insurance market and allow for more informed regulations going forward.”
“If voters reject this ballot, the status quo will remain in place, meaning dental insurance companies will maintain their current premium and pricing balance,” the report said.
Supporters of Question 2 say the move aims to break a “monopoly” in the industry by aligning spending requirements for dental insurance with those for health insurers.
The Massachusetts Dental Society, which is not directly involved in the ballot initiative, also supports what is called medical attrition rate reform.
Insurers strongly opposed the plan, arguing that it would set “unprecedented” rules for the dental industry that would drive up costs for patients and dentists.
Dental industry representatives argue that dental insurance is structured differently than health insurance, which is one of the reasons for the lower premiums.
So far, Question 2’s opponents have far outnumbered the plan’s supporters as the battle for public support mounts ahead of November.
The Committee to Protect Access to Quality Dental Care, which is primarily supported by insurers, has raised nearly $5 million as of September 19, while the Committee on Dental Insurance Quality, which draws much of its support from dentists, has raised more than has reportedly raised $1.5 million, according to the state Office of Campaign and Public Finance.
If voters approve the proposed referendum, the changes would go into effect in 2023.
Christian M. Wade reports on the Massachusetts Statehouse for the North of Boston Media Group’s newspapers and websites. Email him at [email protected]