Massachusetts recently passed a new dental insurance reform law aimed at demystifying the haze that is dental care. But it’s unclear if the anticipated benefits for patients will materialize given that the law is seemingly built on little evidence.
Massachusetts is the first state in the nation to pass enforceable legislation that requires a bigger chunk of dental insurance premiums to go directly toward patient care. However, the law seems to be based on thin evidence and might not actually do what it says it will.
One in four adults in Massachusetts does not have dental insurance. For the remaining 75%, costs can still be a major hurdle in accessing preventive and even emergent care. In Massachusetts and throughout the country, insured patients pay out-of-pocket for most dental care in addition to paying monthly premiums. About 18% of those insured adults in Massachusetts report going without needed dental care due to cost.
The Massachusetts dental insurance reform law, formerly ballot Question Two, passed with over 70% of the vote in 2022 and was enacted on Jan. 1. The legislation was backed by dentists and their advocacy organizations like the American Dental Association. Opposing the ballot measure were dental insurers and their associations, claiming the law would require dental insurers to raise premiums without also leading to tangible improvements in care.
What is the law supposed to do?
Dental insurance reform is not a new idea. States have considered implementing dental medical loss ratios for decades, with building interest after the passage of the Affordable Care Act. The Affordable Care Act mandated MLRs for medical care but did not address dental care.
A dental MLR is, as its name suggests, a ratio. The higher the ratio, the more customers’ monthly premiums go directly toward their care. With the new law, Massachusetts' dental MLR is set at 83%. This means that dental insurers must now spend at least 83% of premium revenue on direct patient care and quality improvement, not profits and administrative costs.
The difference with Massachusetts’ law compared to past efforts is that it’s the first to include an enforceable threshold. If insurers don’t meet the requirement, they must refund their beneficiaries as a penalty. Additionally, the law requires that insurers report to the state annually about their financial metrics. These data become publicly available and allow consumers to identify which policy has the most value for customers. It also allows the state to observe trends and adjust the MLR threshold accordingly.
Threshold set, but data are missing
The law is based on good intentions, but research showing that a high dental MLR results in cost savings and improved quality of care is scant.
One report commissioned by the National Association of Dental Plans, which opposed the legislation, indicated that insurers would have to raise premiums by 38% to meet the new dental MLR. One reason is that insurers would be paying 60% more in claims. Additionally, the report indicates that insurers’ dental MLRs in Massachusetts are currently between 60% and 77%, far below the newly imposed 83% MLR. The association argues that that gap is simply too large to overcome.
Independent researchers at Tufts University agree: They contend that the new dental MLR is arbitrary. Their report suggests that states should collect more data on year-to-year dental MLRs first and then make a more evidence-based decision.
Tufts’ researchers argue that dental insurers could achieve the new dental MLR. But they agree that doing so might mean paying out more claims and raising premiums.
Aside from these two recent reports, there is very little available research with which Massachusetts can develop evidence-based policy. Data from 2015 showed that dental insurers in California hovered around an MLR of 75%. The study’s authors suggested that California and other states looking to implement dental MLRs should give insurers a cushion of several years to meet a minimum MLR, or provide the option for them to justify a lower MLR so they could avoid paying refunds as penalties.
The new Massachusetts dental insurance reform law will likely have wide-ranging consequences for dental health care in the commonwealth. While supporters claim it will provide higher-quality care with greater affordability and access for patients, opponents worry it will hike prices for patients and discourage insurers from providing coverage in the state.
Massachusetts often leads on health policy, and what happens in the state with a high dental MLR will have implications elsewhere. Connecticut and Rhode Island each introduced dental MLR legislation in 2023, setting MLRs as high or even higher. Those bills have yet to become law, but Massachusetts' influence on dental insurance reform has already begun. Whether or not any of these high dental MLRs will reduce patient spending and improve care quality remains to be seen.
Katherine O'Malley is a policy analyst at the Boston University School of Public Health.
