Report details health policy cancellations

Ever since the state's health-care reform law passed four years ago, health insurers have complained about losing money on "jumpers and dumpers."

The term describes Massachusetts residents who, because state law requires them to have insurance, purchase a policy on the way to the hospital and then cancel it on the way home.

A new state report has put some hard numbers behind the theories.

"We wanted to see what the effect was," said Insurance Commissioner Joseph Murphy, whose office commissioned the report released yesterday.

"Is it a problem? Yes. But is it as big a problem as some have said? No," he said.

The report found that as the number of individual subscribers grew from 45,900 in 2006 to 107,343 in 2008, the percentage of individuals terminating coverage within their first year also grew, from 13.8 percent in 2006 to 24.2 percent in 2008.

But overall, the state consultants at Oliver Wyman said the trend only increased insurers' costs by less than 1.5 percent each year.

Insurers don't necessarily agree.

Blue Cross and Blue Shield of Massachusetts executive Andrew Dreyfuss attributed the insurer's recent losses to the trend.

"It's not the way insurance is supposed to work," he told the Herald this week.

The issue surfaced in the wake of the state's 2006 health-reform law. The overhaul merged the previously separate small group and nongroup health coverage markets into one market, in an effort to make the insurance more affordable to individuals.

By 2009, health insurers were telling the state that surging numbers of short-term, high-cost members played a big role in increased premium costs.

Yesterday's report recommends the establishment of an open enrollment period for individuals.

The recommmendation follows a similar push by the Senate's recently passed "Small Business Health Insurance Relief" legislation.

Originally published by By CHRISTINE McCONVILLE.

(c) 2010 Boston Herald. Provided by ProQuest LLC. All rights Reserved.

A service of YellowBrix, Inc.