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Challengers question Patrick motive for rate denials

Baker, Cahill say move won’t cut health premiums

By Noah Bierman
Globe Staff / April 2, 2010

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Governor Deval Patrick’s decision to take on the health insurance industry over rate increases promises to become a major issue in this year’s gubernatorial race, with Patrick trying to address criticism that the state has not slowed health costs and his rivals saying the governor’s approach is off-target and politically motivated.

In rejecting a host of proposed rate increases by insurers, Patrick yesterday made an aggressive attempt to define the state’s role in health care as a jobs issue, insisting that limiting insurers’ ability to raise premiums is key to persuading small-business owners to hire workers again.

“We’re seeking to try to give some relief to working families and to small businesses,’’ Patrick said as he met with 10 small-business owners at a Chelsea clock factory. “For a long time, policy makers have been defeated by the complexity of it, so what we’re trying to do is pierce through.’’

But his major opponents, Republican Charles D. Baker and state Treasurer Timothy P. Cahill, an independent, say the move will hurt insurers and ultimately prove ineffective.

Cahill said the decision would bankrupt smaller insurers, that price caps never work, and that Patrick had failed to address the cost of health care for most of his term.

“It’s nothing more, in my mind, than a Band-Aid,’’ Cahill said. “This is part of what happens when government starts taking over health care. They start insisting about price controls.’’

Cahill also said Patrick’s approach to health insurance runs counter to his previous support for dropping price controls on automobile insurance.

“The governor spent the last three years taking credit for a more competitive environment and rates had come down,’’ Cahill said. Capping health insurance rates, Cahill said, “is the exact opposite of that.’’

Yesterday, Baker stood by a prediction he made that Patrick’s plan would put three or four insurers out of business.

Baker accused Patrick of ignoring the problem until now, saying, “It looks to me like an election-year gimmick.’’ He also cited his own public proposals to hold hearings on insurance rates and to require more transparency in the industry.

He argues that hospitals and other medical providers are the biggest driver in higher health costs.

Baker also said Patrick made a series of decisions in implementing the state’s health care law that made insurance more expensive for small businesses. He cited a requirement that businesses providing insurance cover prescription drugs for employees, which he said raised premiums for employers.

Patrick said his decision to cap rates, made through the Division of Insurance, was not motivated by politics.

But it seems clear that, by singling out the insurance industry for rate hikes, the governor is at least partly taking aim at Baker’s experience; he is a former chief executive of Harvard Pilgrim Health Care.

“Unfortunately, there’s a lot of politics going on,’’ said Lora Pellegrini, a former Patrick aide who previously worked for Baker at Harvard Pilgrim and is now president of the Massachusetts Association of Health Plans. “The division had the power to review rates for years and they have never done anything until now. It smells fishy.’’

Patrick had previously attacked Baker directly on the issue, faulting his $1.7 million salary as an insurance executive, and criticizing him for enabling the industry’s rising premiums. Yesterday, he chose more gentle language and did not mention Baker when warning that the insurance industry would use its significant political power to fight back.

Patrick disputed that denying rate increases would cripple insurers, calling it an excuse for inaction by the industry which, he said, has done little more than hold polite conversations about the problem.

Patrick agreed with Baker that health care providers were also to blame for higher costs. He said he was halting insurance rate increases because it is something he can do now. But he also pointed to a bill he filed in February that would give him authority to cap costs charged by hospitals, physicians groups, and other providers.

At the same time, Patrick defended the state and national health care overhauls against complaints that they failed to control costs.

“The problem with health care is a problem that transcends health care reform,’’ Patrick said. “And that has to do with double-digit premium increases year after year, and that is happening in places that don’t have a universal health care system like we do.’’

Robert Weisman of the Globe staff contributed to this report.