Commentary: Salaries, profits too high for dental insurance companies
A bill before the Maine Legislature would force dental insurers to put at least 80 percent of patient premiums toward actual care.
Across all age groups, dental care is the primary health service that is neglected due to cost. There are several reasons, but two stand out.
First, MaineCare, Maine’s Medicaid program, does not cover comprehensive dental care for adults, leaving thousands of Maine people without coverage for the dental care they need. Second, many people with private dental insurance cannot afford care due to high deductibles and very low annual benefit caps that result in high out-of-pocket costs. A new bill, L.D. 1266, An Act to Improve the Value of Dental Insurance, would address these inequities in private dental insurance.
One important difference between medical and dental insurance is that, under the Affordable Care Act (ACA), medical plans are required to spend at least 80 percent of premium revenue on health care claims and quality improvement, leaving no more than 20 percent to be spent on administration, marketing and profit.
This requirement is known as the Medical Loss Ratio (MLR). The MLR holds insurance companies accountable and helps ensure that the money people spend on premiums is actually used to provide patient care. Maine lawmakers recognized the importance of the MLR requirement when the last Legislature voted almost unanimously to codify the ACA’S 80 percent MLR standard for health plans into Maine law. However, under both the ACA and Maine law, dental insurance plans are able to skirt this requirement.
But patients deserve better from their dental plans. Recognizing this, California passed a law in 2014 that requires dental insurers to report MLRs to the state, which are made publicly available online. The data revealed by these reports is alarming. As recently as 2018, one plan had an MLR of 4 percent. This means that, for every dollar individuals paid in premiums, the insurer spent only 4 cents on patient care. While California has led the nation in MLR transparency, no state requires dental insurers to spend as much of their premiums on patient care as medical plans are required to under the ACA.
In 2016, dental insurers paid 46 percent of dental expenditures in the United States – roughly $50 billion annually. In California, a report published in 2018 showed that only 57 percent of dental plans spent at least 60 cents of every dollar collected in premiums on patient care.
Across the country, billions of dollars are spent each year on insurer executive salaries and administrative costs rather than patient care. Requiring dental insurers to have an 80 percent MLR could significantly reduce the amount patients pay out of pocket on dental care and insurance costs.
The Maine Legislature has an opportunity to address the disparity in premiums vs. spending on patient care. State Sen. Heather Sanborn has submitted a bill, L.D. 1266, that would require dental insurers to report MLRs to the Maine Bureau of Insurance, and would set an 80 percent minimum MLR for dental plans. Dental plans that spend less than 80 percent of premium revenue on patient care and quality improvement would have to rebate the difference back to their enrollees.
L.D. 1266 is a common-sense solution that would hold dental insurers to the same standard as other health insurance companies. A dental MLR requirement would mean dental insurers spend less on executive salaries and corporate profits and more on what matters: providing dental benefits to Mainers and reducing their out-of-pocket costs for dental care.
Maine should lead the nation by requiring dental insurers to report their annual MLR and to spend more of their premium income on patient care.
After all, dental care is health care.
Dr. Jonathan Shenkin is a pediatric dentist in Augusta and on faculty in Health Policy and Pediatric Dentistry at Boston University School of Dental Medicine. Kate Ende is policy director at Consumers for Affordable Health Care.