Voters in Massachusetts will soon decide whether insurance companies should be required to spend the bulk of their customers' premiums — 83 cents of every dollar — on patient care.
Many people pay for dental insurance each month, but only some of that money goes to dental care. The rest stays with the dental insurer for administrative costs, and some of it becomes revenue for the company.
Ballot referendum Question 2 would make Massachusetts the only state in the country to require dental insurers to spend a set percentage of premiums on patient care.
Dentists are rallying behind the “Yes on 2” campaign, arguing the measure would ensure consumers get good value from their dental insurance and hold insurers accountable.
Meanwhile, dental insurers oppose it. The “No on 2” campaign warns that if the ballot measure passes, it will trigger substantial cost increases that will cause some people to lose dental coverage.
Here is a look at what Question 2 would do, what each side says, and what experts think the consequences might be.
What exactly would Question 2 do?
The proposal has two main components.
First, the measure would require insurance companies to spend 83 cents of every dollar subscribers pay in monthly premiums on patient care and initiatives that improve the quality of care. That includes treatments like cleanings, fillings, root canals and gum surgeries. The remaining 17 cents would be available to insurers to spend on costs like employee salaries, investigating fraud and running customer hotlines. The official term for the share of premium dollars that go toward patient care is “medical loss ratio.”
The Affordable Care Act set up a similar system for health insurers. Across the country, medical insurers must spend at least 80% of premiums on patient care or issue rebates to customers. In Massachusetts, health insurers must spend 85%-88% of premiums on patient care.
Question 2 would require dental insurers to issue similar rebates if they don’t hit the 83% minimum. And it gives the state’s division of insurance oversight over premium changes, so it can block "unreasonable" price hikes.
The second significant component of the ballot initiative would require dental insurers to share more data on their finances. Right now, the public does not have basic information, including how much dental insurers spend on dental care.
If the measure passes, these changes are set to take effect in 2024.
What does the ‘Yes on 2’ campaign argue?
Proponents of this ballot measure say patients deserve to know the bulk of their premium dollars are going toward patient care and not the salaries of insurance executives.
“It's not going to fix the system entirely, but what it is, is it's a backstop or a baseline that says dental insurers have to pay out at least 83% of their dollars toward care,” explained Andrew Tonelli, a dentist in North Reading and co-chair of the Massachusetts Dental Society’s government affairs committee.
For years, Tonelli has been trying to get the state Legislature to require more transparency from dental insurers. He said the pandemic added urgency to this issue.
In 2020, dental offices shut their doors for three months, but patients continued to pay dental insurance premiums. Tonelli suspects insurance companies pocketed much of the money they collected during that break in routine care. (A spokesperson for Delta Dental of Massachusetts said the company offered some credit on premiums paid early in the pandemic but, to the best of its knowledge, no other dental insurance did so.)
It’s difficult to know for sure how much insurance companies pocketed since there is limited public information on the finances of dental insurers, but Tonelli hopes this ballot measure will change that.
“What it will allow us to do is have a little bit more transparency and accountability on the insurers,” Tonelli said. “And if there are premium increases, they're going to be tempered by oversight from the state.”
What does the ‘No on 2’ campaign argue?
Opponents of this measure warn that dental premiums could go up by as much as 38%, and thousands of Massachusetts residents may lose dental coverage as a result. (The study that projected this price increase was commissioned and funded by a trade group for dental insurers. The potential bumps in premiums are drawn from a sample scenario and, the study said, an 83% medical loss ratio would affect small carriers the most.)
“You will most likely see some carriers leave the market and some carriers offer less in terms of benefits,” said Jim Welch, a former state legislator and spokesman for the “No on 2” campaign. “When carriers leave the market and benefits get decreased, access goes down, quality goes down and, unfortunately, in the end costs will go up.”
Welch said the measure, if it passes, would disproportionately hurt people who can least afford it: “This ballot question would really negatively affect the smaller insurance carriers, the ones that probably provide dental insurance to employers, smaller mom and pop type organizations.”
Based on the study, the “No on 2” campaign commissioned a survey that found employers might change the dental coverage they offer if prices go up. Welch warned that some might decide not to offer the benefit at all. “Employers that do offer dental insurance may have second thoughts,” he said.
Will dental costs go up?
Experts say the short answer is: Likely yes, but not by much.
Evan Horowitz, executive director of The Center for State Policy Analysis at Tufts University, did some analysis of this. He found insurance companies would likely adjust to the new rules by increasing the dental procedures they cover and allowing dentists to charge more.
Some higher bills could impact patients through co-insurance or after they hit their insurance maximum, but Horowitz doesn’t expect a huge impact.
“We expect price changes to be relatively manageable," Horowitz said. "I mean prices may increase a little bit, but nothing really dramatic.”
"It's not clear that this ballot initiative was ever designed really to solve a problem for patients. It's designed to intervene in an ongoing dispute between insurers and dentists ... ."Evan Horowitz
The big caveat, he said, is that there’s limited data available on what Massachusetts dental insurers spend on care. The study funded by the national trade group suggests large carriers spend around 80% nationally (and about 76% in Massachusetts). That’s why Horowitz anticipates that adjusting to 83% would be unlikely to trigger major changes. However, he said, in the event that plans are far from the 83% threshold, there could be a “more dramatic price increase.”
National studies suggest that smaller plans tend to spend a higher percentage of premium dollars on administrative costs — because there are a number of fixed costs — and a smaller percent goes to patient care. Thus, they may be more likely to raise rates if the measure passes.
What do experts say about Question 2?
Fundamentally, experts say this ballot question is about who gets the money that patients put toward dental insurance.
“It's not clear that this ballot initiative was ever designed really to solve a problem for patients. It's designed to intervene in an ongoing dispute between insurers and dentists about where the money — in the world of dental insurance, the world of dental care — goes,” Horowitz said.
Len Finocchio, a researcher who has analyzed dental insurance spending in California, said an 83% threshold seems “totally possible.” He said there is a precedent for this type of system within the dental insurance industry. Certain types of Medicaid dental insurance products have set a threshold similar to the one proposed in this ballot measure.
How did this question end up on the ballot?
This ballot question originated with one Somerville-based orthodontist: Mouhab Rizkallah.
"This all started about a decade ago," he said. "I made a personal, and perhaps even spiritual, decision that I was going to solve the dental insurance problem."
Rizkallah believes that Delta Dental, a large dental insurer, has funneled millions of dollars in profits to its parent company and consistently lowered the standard of care for patients. Delta Dental is an underwriter for WBUR, which maintains editorial independence.
In particular, Rizkallah's focus has been on MassHealth, the state’s Medicaid program, which was administered by DentaQuest, a sister company of Delta Dental.
"[The company] created a standard for underprivileged children for orthodontic coverage that was so unattainable that your lower jaw could be attached to your foot and they would say you don't need dental care," he said. "The severity of these problems that were not being covered were crazy."
Delta Dental of Massachusetts referred all questions to Doug Rubin, spokesperson for the "No on 2'" campaign. He refuted Rizkallah's claims.
"I think it's actually ironic because what this ballot question will do is actually raise premiums, reduce access to care and make it harder for people to get dental insurance and get dental care," Rubin said. "The ballot question is the wrong place for him to take out this personal grievance."
Delta Dental sold DentaQuest for nearly $2.5 billion last year.
Rizkallah has sued MassHealth multiple times, saying it provides inadequate medical coverage for low-income families. Massachusetts Attorney General Maura Healey has also sued Rizkallah, accusing him of overcharging MassHealth and keeping people in braces longer than medically necessary. (He claims this ongoing lawsuit is retaliation.)
After Rizkallah bankrolled the effort for the Question 2 — contributing over $2 million of his own money — and got the signatures needed to get it on the ballot, dental organizations like the American Dental Association got on board. One of the quirky results is that even the ”Yes on 2” campaign spokespeople can’t quite explain where the figure 83 — as in 83 cents of every dollar — came from. But, they say it’s on par with the number used for medical insurance.
How much money is being spent on efforts to support and oppose this measure?
As of Oct. 1, the Massachusetts Dental Society had contributed over $200,000 to the "Yes on 2" campaign, and the American Dental Association had pledged $5 million. Mouhab Rizkallah is the biggest individual donor, contributing over $2 million. Many dozens of donations have come from individual dentists, mostly of amounts in the low hundreds.
Contributions to the campaign opposing the ballot question are dominated by dental insurers. Delta Dental has contributed the bulk of the cash, putting over $4 million toward the effort, according to data from the Massachusetts Office of Campaign and Political Finance through Oct. 1.
Is there anything else I should know?
The spending threshold established by Question 2 would not apply to what’s known as “self-funded” dental insurance plans. These are plans where an employer is essentially the insurer, taking on the risk, and that employer hires an insurance company to manage and administer the plan.
Horowitz, of Tufts, believes this is fairly common in the dental insurance industry in Massachusetts. And he sees it as a kind of “escape hatch” for at least one potential negative consequence of this measure. If some dental insurers are forced out of the market by the change, Horowitz said, employers could turn to self-funded plans.
Editor's note: This story has been updated to reflect that Delta Dental is an underwriter for WBUR.
This article was originally published on October 18, 2022.