At a public hearing before the Connecticut State Insurance Department over rate increase requests by insurance companies, Dr. David Fried, a dentist with Fantarella Dental Group in Wallingford, is grabbing the ear of anyone who will listen to tell them Connecticut insurance rate payers are being taken to the cleaners when it comes to dental insurance.
“They’re paying for dental insurance, but they’re not getting money spent on dental care,” Fried said outside the hearing. “It’s all about care and getting people healthy, and they’re spending family budget money that could be going to anything but could also be used for getting better care.”
Fried is co-chair of the Connecticut State Dental Association (CSDA) Council on Government Affairs, and the CSDA believes that requirements and restrictions passed under President Barack Obama’s Affordable Care Act should be applied to dental insurance, as well as medical insurance.
At issue is the medical loss ratio (MLR), which measures how much money is spent on direct patient care, compared to how much the insurance company takes in with premiums. The ACA requires that insurance companies maintain between an 80 and 85 percent MLR for medical insurance, depending on the type of plan, but when the bill was crafted, dental insurance was not included, leaving organizations such as the CSDA to work on the issue state-by-state.
Essentially, the argument is that insurance companies are taking in far more in dental premiums than they are spending on dental care because there are no transparency requirements or regulations. And Kathlene Gerrity, executive director of the CSDA, says some of that money could be returned to customers in the form of lower premiums or rebates.
Gerrity says that dental insurance premiums mostly rise in tandem with medical insurance – which was why they were at the hearing – but that some studies have shown the MLR rate for dental insurance as low as 40 percent, with the remaining 60 percent going toward administrative and overhead costs “and other things not related to patient care.”
“So, we’ve been kind of raising this issue as much as possible to say the parity needs to be there for dental insurance, and it’s unfair to patients who don’t understand how different dental insurance is,” Gerrity said. “It shouldn’t be different. It’s not regulated the same way. It has no oversight and therefore it’s how they continue to bring in the enormous gross profits that are happening at these companies.”
“They’re making money on the backs of our patients and providers,” Gerrity said.
The CSDA attempted to get a bill before the Insurance and Real Estate Committee during the 2023 legislative session but were not successful in getting a public hearing. “We had a lot of support in the executive branch, a lot of support on both sides of the aisle in the House and Senate, just could not get that committee to do that public hearing,” Gerrity said. “I can’t imagine anybody being opposed to it, except maybe the insurance companies.”
After failing to get such requirements passed in the Massachusetts legislature, the state put the question of an 83 percent MRL requirement for dental insurance on the ballot for a referendum and received overwhelming support – nearly 72 percent voted in favor of it, and Massachusetts regulators are now drafting the language. Under the approved law, dental insurers would have to refund the excess premium to customers.
California requires MLR reporting for dental insurance but did not set a minimum, according to a 2018 study published in Health Affairs. According to that study, there was an average MLR for dental insurance in California of 76 percent, but it varied from higher MLRs in large group plans to lower MLRs for other plans.
“A legislatively mandated MLR would provide a standardized financial tool and potentially ensure value for dental insurance products,” wrote authors Len Finocchio and Katrina Connelly. “Given the multiplicity of dental products and the varying numbers of covered lives in those products, setting MLR thresholds poses a challenge for stakeholders.”
Other states like Maine, Colorado and Arizona have also implemented MLR transparency requirements for dental insurance giving the state regulators some oversight into dental insurance MLRs, but the Massachusetts referendum was the big shot across the bow for dental insurance, and it’s one that the National Association of Dental Plans (NADP) believes is a mistake both in Massachusetts and in Connecticut, if it should come to pass.
The NADP argues that dental insurance and medical insurance are not the same, particularly because dental insurance premiums are so much lower than medical insurance while administrative and overhead costs for dental remain the same as medical – essentially, it’s the companies having to spend their time doing the same work, but the premiums are much, much lower, so imposing an 80 percent MLR is not realistic.
They also argue an MLR for dental insurance would have the overall effect of driving up the cost of dental services to meet those imposed MLRs, increasing dental premiums and necessitating more out of pocket spending for customers and relegating any potential premium rebates as negligible.
According to a research report commissioned by the NADP and authored by Milliman regarding the dental insurance MLR question in Massachusetts, Milliman found the MLR for dental insurance companies in the state was between 68 and 79 percent for small and large group plans, respectively.
The Milliman report also determined that dental premiums would have to increase to retain enough revenue to cover administrative costs and that payments to providers could likewise increase.
“High loss ratio in dental is bad public policy because it assumes that a high premium medical product and a low premium dental product are operating on the same financial model,” said Michael Adelberg, executive director of the NADP. “In the event of another state following Massachusetts, dental carriers in that state will have no choice but to look at the artificially changed business environment and determine whether they can still participate and determine whether high premium increases will be necessary to still participate.”
One company, Guardian Life, announced that it would no longer offer dental insurance as part of its small group coverage following the Massachusetts referendum, but another company appears poised to move into the same market.
Lawmakers from both sides of the political aisle looking to crack down more strongly over year-after-year rate increases that come before the Connecticut Insurance Department, including gaining the ability to request documents from the insurance companies and bring in hospitals to explain their price differences, which insurers during the hearing pointed to repeatedly.
But Gerrity says the lack of transparency and MLR requirements for dental insurance is allowing those companies to make money off both patients and providers and says they will continue to push for legislation to address the issue.
“If you can do 83 percent MLR in medical, there’s no reason you can’t do 83 percent in dental. Dental is a small piece of the pie, obviously, but the reality is these are huge conglomerates, it’s the exact same software, exact same people. It’s really not that different,” Gerrity said. “This has to happen, it’s long overdue.”
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