BOSTON — The state’s highest court is considering a legal challenge that could knock a proposal to set spending controls on dental insurers off the November ballot.
On Monday, the Supreme Judicial Court heard oral arguments in a lawsuit that asks justices to declare that the wording of the ballot question is unconstitutional.
The referendum, which was cleared for the Nov. 8 ballot by Attorney General Maura Healey, asks voters to put guardrails on spending for dental services by requiring insurance companies to spend at least 83% of their revenues on “dental expenses and quality improvements” instead of administrative costs.
Backers say the move is aimed at breaking up a “monopoly” in the industry by putting dental insurance spending requirements in line with those for medical insurers.
But a provision of referendum would require insurers to submit detailed annual financial reports to the state on coverage they offer other than dental plans.
Under the state constitution, referendums offered by initiative petitions must be “related” or “mutually dependent” to qualify for the ballot to be put before voters.
A complaint filed by Lory-San Clark and Wendy Sutter argues the question is unconstitutional because it would serve two purposes: setting a minimum medical loss ratio for dental benefit plans, and requiring dental benefit plan carriers to submit “financial reports on all lines of business, including non-dental insurance products.”
The plaintiffs argue that Attorney General Maura Healey erred when she certified the question for the ballot and asks justices to deem the referendum unconstitutional.
“These reports require additional data that’s unnecessary for verifying a medical loss ratio,” attorney Tad Heuer, who represents the plaintiffs, told justices Monday. “They require extensive, entity-wide insurance data that goes well beyond just dental insurance.”
However, Matthew Perry, an attorney for proponents of the ballot question, argued that the two sections of the referendum are closely related. He said that implementing a medical loss ratio without requiring companies to open up their financial books could lead to “financial manipulation” by insurers.
“The data can be used to help verify the accuracy of carriers’ medical loss ratio,” Perry told justices.
Assistant Attorney General Adam Hornstine told justices the provisions are “operationally related” and argued that the question was properly certified for the ballot.
A similar legal challenge before the SJC — which also alleged a “dual purpose” on a statewide referendum — knocked a proposed millionaires’ tax off the 2018 ballot.
During Monday’s hearing, Justice Scott Kafker questioned whether the medical loss ratio referendum contained two questions that should be put to voters separately.
“The public has a limited time and energy to focus on these things, so we want rifle shots that they can understand,” Kafker said. “Are we really asking voters to vote on a unified, related proposal? Or are we asking them on two — potentially good ideas — but separate.”
Overall, the plaintiffs in the case argue that setting a mandate to require medical loss ratios would drive up cost for consumers and reduce health care options.
“Imposing a minimum medical loss ratio would likely result in reduced access to and choice of dental coverage, particularly for working families, low-income individuals, and those purchasing dental benefit plans through the Massachusetts Health Connector,” lawyers for the plaintiffs wrote in their complaint.
Insurers oppose the plan, arguing that it would impose “unprecedented requirements” on the dental industry that will drive up costs for patients and dental providers.
Industry officials argue that dental insurance is structured differently than medical insurance, which is one of the reasons premiums are lower.
Backers of the referendum have cleared several hurdles on the road to the ballot. Lawmakers have until Wednesday to take action on pending legislation that would implement medical loss ratio reform. If they don’t act, backers of the referendum must submit more than 13,000 signatures by July 6 to make the ballot.
If voters approve the proposed referendum, the changes would go into effect in 2023.
Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at cwade@northofboston.com.
