Mass. Insurer Abandons Medicare Advantage

Cross-posted from Critical Condition on National Review Online.

Remember those Andy Griffith Medicare ads suggesting that retirees wouldn’t lose their benefits? The Boston Globe is reporting that Harvard Pilgrim Health Care, the second-largest health insurer in Massachusetts, has decided to entirely drop out of the market-oriented Medicare Advantage Program (h/t Drudge):

Harvard Pilgrim Health Care has notified customers that it will drop its Medicare Advantage health insurance program at the end of the year, forcing 22,000 senior citizens in Massachusetts, New Hampshire, and Maine to seek alternative supplemental coverage.

The decision by Wellesley-based Harvard Pilgrim, the state’s second-largest health insurer, was prompted by a freeze in federal reimbursements and a new requirement that insurers offering the kind of product sold by Harvard Pilgrim — a Medicare Advantage private fee for service plan — form a contracted network of doctors who agree to participate for a negotiated amount of money. Under current rules, patients can seek care from any doctor.

“We became concerned by the long-term viability of Medicare Advantage programs in general,” said Lynn Bowman, vice president of customer service at Harvard Pilgrim’s office in Quincy. “We know that cuts in Medicare are being used to fund national health care reform. And we also had concerns about our ability to build a network of health care providers that would meet the needs of our seniors.”

Readers will recall that the largest source of funding for Obamacare was eliminating $548 billion of funding for privately managed Medicare Advantage plans. Harvard Pilgrim will route its Medicare Advantage customers back into traditional, government-run Medicare, and seek to offer them “Medigap” plans, supplements to traditional Medicare that lack prescription drug coverage:

Harvard Pilgrim in a second mailing this week will urge customers to switch to a new Medicare Supplement plan it will begin offering in October. Unlike Medicare Advantage, which is overseen by the Centers for Medicare and Medicaid Services, the new Harvard Pilgrim plan will be overseen by the Massachusetts Division of Insurance.

It will be “slightly more expensive’’ than the Medicare Advantage plans, but competitive with supplemental insurance plans offered by rivals such as Blue Cross Blue Shield of Massachusetts, the state’s largest health insurer, Bowman said.

She said the Medicare Supplement plan will feature some benefits not covered by the current plan, such as fitness reimbursements, but won’t pay for prescription drugs, which are covered by some versions of the current plan. Instead, seniors can buy separate supplemental drug coverage through a partnership with Coventry Health Care, in Bethesda, Md.

Weekend Links: CastroCare, RomneyCare, and McGovernCare

Cross-posted from The Agenda on National Review Online.

Laurie Garrett has a thoughtful piece on the precarious state of the health care system in Cuba in the latest issue of Foreign Affairs. For those who don’t want to spend 99 cents on the article, John Graham has a post on it over on Critical Condition.

Michael Cannon does a persuasive job taking down Jonathan Gruber’s defense of the Massachusetts health care system in the Wall Street Journal.

Philip Klein reports on the renewed push for single-payer health care at the Netroots Nation 2010 conference in several posts. The speeches that he refers to, from Melinda Gibson,  Harry Reid, and others will be posted on-line by the conference organizers after its conclusion.

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Why Liberals Haven't Learned The Lessons Of Massachusetts

Cross-posted from Critical Condition on National Review Online.

Faced with a barrage of bad news about the health-care system in Massachusetts, Obamacare advocates such as Jonathan Gruber, Jonathan Cohn, Ezra Klein, and Igor Volsky have started fighting back, arguing that things are going great in the Bay State. Cato’s Michael Cannon has done a great job of summarizing their arguments, and why they fall flat:

• The Commonwealth Fund reports that even though Massachusetts already had the highest health insurance premiums in the nation, premiums rose faster post-RomneyCare than anywhere else; 21-46 percent faster than the national average.
• A recent study estimates that RomneyCare has so far increased employer-sponsored health-insurance premiums by an average of 6 percent.
• The success that Klein sees in Massachusetts’ individual market — which accounts for just 4 percent of the private market — is merely the product of shifting costs to workers with job-based coverage.
• Contrary to Klein’s post hoc spin that RomneyCare “was never an attempt to control costs,” Romney himself promised that “the costs of health care will be reduced.”
• Aaron Yelowitz and I find evidence suggesting that uninsured Massachusetts residents are responding to the individual mandate not by obtaining coverage but by concealing their insurance status.  Coverage gains may therefore be less than official estimates suggest.
• Evidence is mounting that, despite stiffer penalties than ObamaCare will impose, increasing numbers of people are gaming the individual mandate by only purchasing health insurance when they need medical care. Such behavior could ultimately cause the “private” insurance market to collapse.

Liberals like to talk about controlling health costs, but in practice, they are far less concerned about reducing costs than they are about increasing spending. Here again is Jonathan Cohn:

If the lesson from Massachusetts is that “genuine cost control is avoided because it’s politically difficult” then fiscal disaster is inevitable. Health care costs are going to keep rising, no matter what we do. And if that’s the case, I would certainly prefer a world in which people don’t have to worry about paying their medical bills. It doesn’t cost a lot to make that happen; the incremental cost of insuring the uninsured is a small fraction of health care spending.

Cohn captures a lot of what’s wrong with liberal health-care philosophy in these few sentences. “If fiscal disaster is inevitable, we might as well cover the uninsured.” Actually, the exact opposite is true. The reason why health care costs keep rising, and the reason we face fiscal disaster, is because of subsidized insurance.

Government programs like Medicare and Medicaid, which started out small, reward irresponsible utilization of health-care resources. As MIT economist Amy Finkelstein showed in an important paper, Medicare alone is responsible for nearly half of the health care inflation between 1950 and 1990. The reason is hardly mysterious: if you subsidize health-care spending, as Cohn recommends, you will get more of it, leading to even more health-care inflation. It’s Economics 101: if you increase demand for a product, and keep supply constant, prices will go up.

And, so, we end up with the death spiral of state-funded health care. As the cost of health care increases, driven there by government subsidies, fewer people can afford private insurance, leading to more cries for more government subsidies, which will drive costs up even further. Wouldn’t it be nice if we could try the opposite approach?

Emergency Room Visits Increase in Massachusetts

Cross-posted from Critical Condition on National Review Online.

One of the President’s favorite arguments for Obamacare was that it would save money by insuring those who would otherwise get taxpayer-funded care from the emergency room. “Those of us with health insurance,” he said last September, “are also paying a hidden and growing tax for those without it—about $1,000 per year that pays for somebody else’s emergency room and charitable care.”

Unfortunately, the experience of Massachusetts appears to be disproving the President’s hypothesis. Last week, the Massachusetts Division of Health Care Finance and Policy reported that, despite the imposition of universal health insurance in that state in 2006, emergency room visits increased by 9 percent between 2004 and 2008, even after taking population increases into account.

The Boston Globe spoke with David Morales, the commissioner of the Division, who explained that the uninsured “are not really responsible for significant ER use,” echoing the findings of national and local studies. As John Goodman points out, “people with insurance consume twice as much health care as the uninsured, all other things equal.” If the number of doctors stays the same, but more and more people utilize health care resources, the supply of available doctors goes down.

Hence, it takes longer and longer to get an appointment to see a doctor, and people end up right back where they started: in the emergency room. As the Globe points out, “the growing use of emergency rooms has significant cost implications, because private insurers and government programs pay substantially more for a visit to the emergency room than for a doctor’s appointment.”

Massachusetts reminds us: Access to health insurance is not the same thing as access to health care.

Finally, Some Good News From Massachusetts

Cross-posted from Critical Condition on National Review Online.

Finally, some good news with the Massachusetts insurance price-control saga: an appeals board of attorneys from the state’s Division of Insurance has overturned Governor Deval Patrick’s denial of Harvard Pilgrim Health Care’s requested rate increases. The Boston Globe reports that the “panel…found that rate increases Harvard Pilgrim initially sought in April are reasonable given what it must pay to hospitals and doctors.”

Insurers yesterday cheered the ruling, which bodes well for three other companies now before the appeals board with their own cases against capped rates.

“The decision shows what we have been saying all along,” said Lora Pellegrini, president of the Massachusetts Association of Health Plans, a trade group based in Boston. “The denial of carrier rates was inappropriate.”

The other insurers in the state can hold out hope that the appeals board will give them the same treatment, saving them several months of uncertainty and litigation.

Meanwhile, in Washington, it didn’t take long for the Obama administration to try Deval Patrick’s tactics on for size. Everyone knows that insurers across the country are going to have to raise premiums in order to account for all of the new mandates in the Affordable Care Act. But the President is trying to have his cake and eat it too, warning insurers that the government will not allow “unreasonable premium increases.” He would doubtless cheer on the implosion of the private health insurance business, but consumers would not.

Both in Massachusetts and across the nation, genuine attempts at reducing the cost of health insurance will require a completely different approach to health care reform: one that incentivizes patients to make prudent choices about health spending, and one that frees insurers from the mandates that prevent them from creating affordable insurance products.

Too many Republicans are formulating their health care positions by melding a general free-market disposition with a split-the-difference political posture. These Republicans need to understand that the desire to repeal Obamacare is neither a temper-tantrum nor an ideological litmus test. Rather, as a policy matter, repeal is critical to the economic fortunes of tens of millions of Americans, for whom affordable health insurance is increasingly out of reach.

Mass. Insurance Official: Premium Caps "Will Be A Train Wreck"

Cross-posted from Critical Condition on National Review Online.

Earlier this week, the Associated Press obtained explosive internal e-mails from Robert Dynan, Deputy Commission for Financial Analysis at the Massachusetts Division of Insurance. The e-mails were drafted in reaction to the April 1 news—which Dynan only learned about by reading the papers—that state insurance commissioner Joseph Murphy was imposing price controls on Massachusetts health insurers. Drynan writes that Murphy's action "has the potential for catastrophic consequences including irreversible damage to our non-profit health care system."

In an e-mail sent to colleagues on April 6, Dynan expresses his fear that insurers will go bankrupt as a result of Murphy's decision:

The rates, by design, have no actuarial support. This action was taken against my objections and without including me in the conversation, but this does not relieve us of the burden of monitoring solvency. Indeed, our job of monitoring solvency just got exponentially more difficult and exponentially more important. There most likely will be a train wreck (or perhaps several train wrecks).

On April 30, Dynan sent a detailed assessment to Murphy, outlining 13 key concerns, which I summarize here:

1. If an HMO goes insolvent, the non-profit hospitals will be forced to eat millions of dollars in un-reimbursed claims, "potentially jeopardizing their financial condition."
2. Most HMOs "showed less than stellar results" in 2009, and lack the "excess capital" to sustain further losses. "I can guarantee you that there are very few regulators in the United States who would disagree with me."
3. The Massachusetts insurance market is mostly non-profit; non-profit plans have narrower profit margins and are therefore more likely to fail. "If they were to fail, the void may be filled by for-profit insurers."
4. Some HMOs in the state, for whatever reason, undercharged for health insurance in 2009; these insurers will be especially hurt by a second year of losses. "Over time, consumers and employers will take advantage of this price inefficiency and will...swamp them with further losses."
5. The rate caps will not affect any other practices in the health care system. "Hospitals do not seem inclined to tear up valid contracts with the HMO's in order to give them relief."
6. There is a "serious potential for brokers and insureds to game the system...A rational person would cancel their old policy and take out a new policy at the artificially low rate...it could be very damaging to the 2010 business plans."
7. If the HMOs succeed in overturning the price controls in court, "employees run the risk of a retroactive bill from their employer for health insurance back to April 1."
8. Three insurers are already under formal state oversight due to insolvency risks, and more such situations are likely due to the price caps. "This has the potential for a 'run on the bank' for the [insurers in question]."
9. All insurance companies, including HMOs, "are still recovering from a very difficult investment climate," leading to further concerns about their solvency.
10. "The HMO's cannot be legally required to sustain these losses in the merged market forever." HMOs will exit the market, leaving Massachusetts residents without access to insurance.
11. Some hospitals will be hit disproportionately if an insurer goes bankrupt, "depending on the level of business with the insolvent HMO. Also, the Commonwealth's General Fund is in no condition to assist in a bailout."
12. A Massachusetts resident who incurs health expenses out-of-state, if his insurer goes bankrupt, will be personally liable for those expenses. The out-of-state hospital "will demand payment from the Massachusetts resident, who may only recover cents on the dollar [from his bankrupt insurer]."
13. An epidemic of insurer bankruptcies could lead to a loss of Massachusetts' accreditation with the National Association of Insurance Commissioners, which "would not be helpful to the many life and property and casualty companies that call Massachusetts home."

Murphy, Dynan's boss, did not take too kindly to these objections. "Negative and conclusory statements about the effect of the Divison's actions on insurers and the market are unprofessional and counterproductive." Dynan half-heartedly apologized in a written letter dated June 4, saying "I should have been more careful in the selection of words I used to express my private opinion."

On June 9, both the Boston Globe and the Boston Herald ran stories about the dust-up. Dynan could not be reached for comment and appears to have been muzzled. "Murphy said Dynan was either on vacation or on a state-mandated furlough," reported the Herald.

Health Wonk Review Review: Why Insurers Aren't Utilities

Cross-posted from The Agenda on National Review Online.

Health Wonk Review is a traveling, biweekly compilation of interesting posts from the health care policy blogosphere. The latest edition, hosted by David Williams of Health Business Blog, highlights articles from 23 blogs on the left, right, and center. Much of the focus this time around is on the provision in the Patient Protection and Affordable Care Act that requires insurers to spend 80-85% of their premium revenues on patient medical expenses (the “medical loss ratio” in industry parlance).

Austin Frakt of the Incidental Economist argues that increasing competition among insurers, by allowing people to buy insurance across state lines, for example, can lead to increased costs, because health care providers (hospitals, doctors, etc.) also play a role in determining the price of healthcare. While I partially agree with him on that front, his favored solution—converting insurers into utilities via medical loss ratio mandates—will make the problem worse, not better. As David Williams observes, “it is foolish to look at medical costs as good and administrative costs as bad,” because MLR mandates incentivize insurers to “drive premiums up over the long term so that relatively fixed administrative costs (like executive salaries) decline as a percentage of premiums.”

Jaan Sidorov of the Disease Management Care Blog summarizes the MLR debate as one between “constructionists,” who understand that insurance is strictly about pooling risk, and “activists,” who seek to so “enable the betterment of needed health care services” via insurance regulation. (I would quibble with the term “betterment.”) Sidorov notes that “the activist view of Medicare may underlie the nomination of [Donald] Berwick to lead the [Centers for Medicare and Medicaid Services].”

Louise Norris of the Colorado Health Insurance Insider analyzes a new report from the National Center for Health Statistics, which points out that most of the people who visit emergency rooms already have health insurance, debunking the myth that individual mandates are necessary to fix this problem.

John Goodman wrote an outstanding piece on his outstanding blog about why the problem of rescissions—when an insurer cancels someone’s policy because he had misrepresented his preexisting conditions—is overrated. (In sum, rescissions are very rare, and abuse of the procedure is already illegal.)

Bob Vineyard of InsureBlog notes that the latest episode of the Massachusetts health care soap opera involves the state legislature forcing wealthy hospitals to make a “one-time $100 million contribution”—a sentence in which possibly every word is factually inaccurate—to keep the Bay State’s health care system from falling apart. “Some politicians just don’t learn,” he writes.

Roy Poses at Health Care Renewal notes a Pittsburgh Tribune-Review article that shows that the University of Pittsburgh Medical Center paid $5.16 million to CEO Jeffrey Romoff in 2009, and millions to other top executives, puncturing the illusion that it’s only at for-profit entities that senior management is well-paid.

Brad Flansbaum at the Hospitalist Leader is pessimistic about the fiscally sane options for dealing with the “doc fix.” As he concludes: “‘Physicians, you will be making less money, the good time days of the last forty years are coming to a close.’ What is waste, what we can afford, who will take the hit…they are all up for debate, and it is going to get ugly.” Indeed.

Surprise! Mass. Insurers Hemorrhaging Cash

Cross-posted from Critical Condition on National Review Online.

The Boston Globe is reporting that the four largest health insurers in Massachusetts—Blue Cross Blue Shield, Harvard Pilgrim Health Care, Tufts Health Plan, and Fallon Community Health Plan—lost a combined $152 million in the first quarter of 2010. The companies stated that $116 million of those losses were directly caused by the April 1 institution of price controls by the state’s insurance commissioner. This is exactly what insurers predicted would happen when they filed a lawsuit in Boston last month.

“The health plans are not collecting enough premiums to cover their costs,” said Lora Pellegrini, president and chief executive of the Massachusetts Association of Health Plans. “These results support what we’ve said: that the plans would lose millions of dollars from this scheme and it would do nothing to control underlying health care costs.”

This news will cheer members of three overlapping groups: those who believe that profit is an offensive idea in the realm of health care; those who believe that corporate malfeasance is responsible for most social ills; and those who want the private insurance market to collapse, so that it can be replaced by a socialized model.

But for those who are unfortunate enough to have health insurance in Massachusetts, it is an alarming development. It is also one with national ramifications, as Obamacare rolls the Massachusetts model out across the country.

Massachusetts’ problems are not hard to figure out. Between its forest of insurance mandates and its hospital oligopolies, the cost of health care in the Commonwealth is soaring. Insurance premiums are the symptom, and not the cause, of this problem. But local politicians have been taking their cues from the White House, which has decided that demonizing insurers is easier than actually improving the health care system:

That effort got a fresh boost yesterday from another state report that disclosed that many of the state’s biggest health providers are sitting on large reserve funds, some in excess of $1 billion. At the same time, the state Senate is preparing to vote on a proposal that would require many hospitals to make one-time contributions totaling $100 million to help small businesses pay for health insurance.

Politicians’ claims that insurers were gouging consumers with reckless rate hikes have been exposed as untruthful. So now, the pols are trying a new line on for size: that insurers are greedily hoarding secret piles of excess cash. But insurers are required by law to hold assets in reserve, so that they can meet their future claims obligations without risking insolvency. The politicians are trying to let themselves off the hook, by demanding that insurers eat their near-term losses and deplete their long-term reserves.

The four insurers listed above—non-profits all—probably have enough in reserve to get through a few years of price controls. But after that, they will have to raise rates dramatically, in order to catch up with several years of health care inflation. If they can’t, they will go broke, and the Left will blame “market forces.” Don’t let them.

The Feds Join The Massachusetts Healthcare Debate

Cross-posted from Critical Condition on National Review Online.

There is a new player in the ongoing battle over spiraling health-care costs in Massachusetts: the U.S. Department of Justice. The Boston Globe reported yesterday that the DOJ has opened an investigation into “anticompetitive behavior” by Partners HealthCare, the most powerful hospital organization in Massachusetts.

This fight matters, and not merely because it is a window into the unraveling health-care experiment that is the Bay State. It is also a key to solving the fiscal crisis caused by Medicare and Medicaid.

The Centers for Medicare and Medicaid Services (CMS) project that, in 2010, the federal government will spend $966 billion on health care, with state governments tacking on another $300 billion, for a total of $1.3 trillion. Over one-third of those expenditures are for hospital care: $386 billion of federal and $79 billion of state expenditures.

Traditional approaches to entitlement reform are conceptually simple but scary to politicians: they involve things like raising the age of eligibility for Medicare above 65; curtailing benefits for the wealthy; etc. Such reforms would certainly be helpful, if they could be enacted, but they are incremental measures that will ultimately be overwhelmed by runaway health-care inflation. Paul Ryan’s roadmap is a big improvement upon these traditional solutions, as it introduces consumer choice and other market reforms that can help drive costs down.

But consumer choice only matters if consumers actually have a choice. If Republicans can successfully introduce a real market into the provision of hospital services, they can help Americans shop for medical value, have a significant impact on the growth of government spending, and expand access to health insurance.

The cost of health insurance keeps going up, at a much faster rate than inflation. This problem is especially acute in Massachusetts, which has the most expensive health insurance in the nation. Despite Governor Deval Patrick’s demagogic efforts to blame the insurance industry for the Bay State’s problems, neither he nor the RomneyCare system he inherited have tackled the underlying causes of health care inflation.

Preeminent among these causes is hospital monopolies. Numerous studies, such as this one from the Robert Wood Johnson Foundation, have shown that the wave of hospital mergers that began in the 1990s have created regional monopolies that have driven up the cost of health care. Partners is one such example.

Partners HealthCare was formed in 1993 from the merger of two eminent Boston hospitals affiliated with Harvard Medical School: the Massachusetts General Hospital, and Brigham and Women’s Hospital. Then-Governor William Weld signed off on the merger, along with his Secretary of Health and Human Services, a guy named Charlie Baker. Partners went on to acquire a half-dozen other major community hospitals around Massachusetts, and is now the state’s largest private employer.

In 2008, the Globe exposed the “handshake that made healthcare history”: Partners’ successful effort in 2000 to get Blue Cross Blue Shield of Massachusetts to agree to pay them more money, in exchange for Partners’ promise that they would demand the same rate increases from everyone else. Ever since, individual insurance rates have grown at 8.9% a year in Massachusetts, twice the previous rate:

It was the gentleman's agreement that accelerated a health cost crisis.

And Dr. Samuel O. Thier, chief executive of Partners HealthCare, and William C. Van Faasen, chief executive of Blue Cross Blue Shield of Massachusetts, weren't about to put it in writing.

Thier's lawyers cautioned that a written agreement between the state's biggest hospital company and its biggest health insurer that would make insurance more expensive statewide might raise legal questions about anticompetitive behavior, according to officials directly involved in the talks...

Both Partners and Blue Cross deny that they acted improperly in the 2000 payment negotiations or in their dealings since. Partners issued a statement saying that Thier pledged only that he would treat all insurers equally. Blue Cross executives have said that the big pay raise to Partners in 2000 was needed to offset years of low rates.

But plainly Thier's attorneys were wary of the legal risk of even discussing a market-setting agreement, those involved in the talks say. And soon it would be obvious why.

By spring 2001, Thier had pressured two insurers, Tufts and Harvard Pilgrim Health Care, to give Partners rate increases as large or larger than Blue Cross got. Partners' internal memos reviewed by the Globe show officials knew that insurers would have little choice but to raise prices to consumers to cover the new Partners rates.

Thus it was that a company originally launched with the promise of saving hundreds of millions of dollars by consolidating two famous hospitals instead became a driving force behind the high cost of medicine in Massachusetts. Blue Cross has increased the rate it pays Partners by 75 percent since 2000, far more than increases given to other teaching hospitals that mainly treat adults. Other insurers have boosted payments to Partners by a similar amount.

Blue Cross was reluctant to go along with Partners’ demands, according to the Globe, but knew that they would pay a heavy political price if they didn’t cave:

No private company was able and willing to moderate Partners' ambitions. Blue Cross, which now controls 60 percent of the health insurance market, was best positioned to do so but flinched at the possibility of a public tangle. As former Blue Cross executive Peter Meade said at a meeting of company executives in 2000 at which some urged a tougher stand against Partners: "Excuse me, did anyone here save anyone's life today? We are a successful business up against people that save people's lives. It's not a fair fight..."

Today Partners dominates what was once one of the most competitive healthcare markets in the world, with a hospital and physician network big enough to overwhelm competitors and intimidate insurers.

Charlie Baker, now running for governor against Deval Patrick, admits his mistake: Signing off on the deal was like “having the grenade that you throw on one end of the boat roll back down and blow up on you when the boat shifts.” His humility is to his credit. But the problem remains to be solved. And Obamacare makes the problem worse by preventing new hospitals from competing against the incumbents.

Many hospitals lose money, and consolidation can sometimes be the most effective way to resolve inefficiencies in the system. But not so in the case of Partners, where the merged behemoth used its market power to preserve its redundancies and build massive, billion-dollar additions to its already extensive facilities. (The photo above is of Mass General's latest expansion.)

In recent years, antitrust lawsuits against hospital mergers have mostly failed in the courts. Judges, perceiving hospitals as sympathetic citadels of healing and hope, are less suspicious of their anticompetitive tendencies. If judges interpret the “market” of a hospital broadly (say, by defining Mass General’s market as the entire state instead of the city of Boston), they can convince themselves that these hospitals have more competitors than they actually do. Will Partners gain an equally sympathetic hearing?

The Republican approach to health care reform has focused almost exclusively on the way we pay for insurance. There is no doubt that this is an important aspect of reform. But a free market for health insurance means little if there isn’t also a free market for health care. Real reform will need to address both sides of the equation.

Model Massachusetts?

Cross-posted from Critical Condition on National Review Online.

If you wonder what will happen to health insurers under Obamacare, all you have to do is look at Massachusetts. Despite the fact that 97 percent of Massachusetts residents have health insurance, the cost of that insurance is the highest in the nation. A 2009 study from the Commonwealth Fund found that the average employer-sponsored family plan cost $13,788 in Massachusetts in 2008, 12 percent above the national average.

 But did near-universal coverage reduce the cost of health insurance over time? No. In fact, the cost of family health insurance increased 40 percent in Massachusetts from 2003 to 2008, 21 percent faster than the rate of growth nationally.

And in Boston, just as in Washington, politicians don’t take responsibility for their role in causing the problem. Instead, they blame it all on the insurance companies. The Associated Press is reporting today that Massachusetts insurance commissioner Joseph Murphy is effectively instituting insurance price controls statewide, forcing insurers to absorb health-care inflation by themselves (h/t Mike Shedlock):

Insurance Commissioner Joseph Murphy said he had rejected 235 of 274 proposed rate increases because they included “excessive increases and rates unreasonable relative to the benefits provided.”

Blue Cross Blue Shield of Massachusetts, the state’s largest private insurer, said in a statement: “We share concerns about the current rate of premium increases, but arbitrary government price controls will not solve the problem and will likely cause unintended harmful consequences.”

Michael Widmer, president of the Massachusetts Taxpayers Foundation, which represents insurers, health care providers and an array of area businesses, termed the action “arbitrary and capricious.”

Is it conceivable that politics played a role in Murphy’s ruling?

The announcement had political overtones: Gov. Deval Patrick, a Democrat, is seeking re-election this fall against a field that includes Republican Charles Baker, the former president of Harvard Pilgrim Health Care.

Patrick is staking himself out as the guardian of small businesses and middle-class voters, and trying to cast Baker as an industry protector. The governor argues that small businesses are limiting their hiring because they cannot cope with double-digit health care premium increases…

“The governor’s actions today represent an election-year gimmick which fails to address the underlying causes of increased health care costs,” said Baker spokesman Rick Gorka.

Patrick aides sought to bring attention to the governor’s announcement by inviting reporters to his appearance at the Chelsea Clock Co. It occurred moments after the Division of Insurance released its statement.

The theatrics harkened back to testimony Patrick gave last month before a legislative committee reviewing the provider cost-increase cap. Aides also assembled reporters for that event, and Patrick emerged to accuse Baker and Treasurer Timothy Cahill, waging an independent run for governor, of inaction on the issue.

The insurance division rejected the rate filings through an emergency regulation announced by Governor Patrick in February.