BOSTON—A top state insurance official warned premium caps the Patrick administration placed on major Massachusetts health insurers this spring could cripple them financially and would most likely cause "a train wreck," according to an e-mail obtained Tuesday by The Associated Press.
The April 6 e-mail, obtained following a public records request, showed Deputy Insurance Commissioner Robert Dynan warned the caps could cause insolvency at the insurance companies, including Blue Cross Blue Shield of Massachusetts and Harvard Pilgrim Health Care. Dynan also wrote the caps were imposed "against my objections," as well as without his input.
Dynan heads the insurance division's Financial Surveillance Unit. His primary responsibility is to guarantee that health insurers in Massachusetts remain financially secure so they can provide the coverage customers purchase.
In yet another e-mail written and received Friday, three days after the AP filed its request for Dynan's e-mails on the subject, the deputy commissioner apologized to his boss, Insurance Commissioner Joseph Murphy.
"I should have been more careful in the selection of words I used to express my private opinion," Dynan wrote on June 4. "As you know, but others for whom the e-mail was not intended may not, the Financial Surveillance Unit does not and never has participated in rate filings, their approval or disapproval."
On April 1, Murphy announced he was rejecting 235 of the insurers' 274 proposed rate increases. He complained the industry was seeking premiums for businesses with up to 50 employees that called for rates he deemed "excessive."
The companies had proposed base price hikes averaging 8 percent to 32 percent. Murphy and Gov. Deval Patrick argued any increase should be closer to the medical consumer price index, which has a 4.8 percent inflation rate. Last week they allowed one company -- whose rates they initially rejected -- to charge premiums averaging 7.7 percent.
The insurance companies suggested they were being targeted by Patrick for political purposes during a re-election year. One of his leading rivals is Republican Charles Baker, who was president of Harvard Pilgrim for a decade before resigning in July to run for governor.
The insurers argued they should be allowed to charge rates that cover their costs and ensure they remain solvent.
They also contended that limiting the premiums they charge customers, while not capping the cost charged to them by providers, including doctors and hospitals, put an unfair financial burden on their companies.
In a second e-mail to Murphy, dated April 30, Dynan wrote that artificially setting rate limits -- rather than basing them on the projected costs -- could create "the potential for catastrophic consequences to our nonprofit health care industry."
In a lengthy rebuttal sent just two minutes later, Murphy wrote that "negative and conclusory statements about the effect of the division's actions on insurers and markets are unprofessional and counterproductive."
The commissioner noted his authority to reject rate proposals, and said despite Dynan's statements, "We did not implement an artificial price cap." He said the rates were rejected as part of a larger, more comprehensive review.
Murphy said Tuesday during a telephone interview with the AP he neither asked for Dynan's apology nor disciplined his subordinate between his first and last notes.
"I can't speculate on his motivation for it, other than realizing the comments made in the original e-mail were hyperbolic and inaccurate, first and foremost," Murphy said.
The commissioner added: "I respect his position. He is a conservative CPA. My job is to look at the whole situation."
Dynan did not return several phone messages left at his home, and his office phone was disconnected from the insurance division's voicemail system last week. Murphy said the division had been moving offices.
Murphy issued his sweeping rate rejection little more than a month after Patrick, in a speech to area business leaders, announced he was instructing the commissioner to consider rejecting any increase exceeding that index. He said unchecked premium growth was stifling job creation in Massachusetts.
The governor then lauded Murphy's subsequent decision, saying he hoped it would lead to lower premium costs for struggling small businessmen. Insurers sued to overrule the rejection, but their first appeal was rejected.
Patrick and his administration support legislation that would control health care provider costs, but the governor has argued that controlling premiums was an appropriate starting point for the discussion.
