EDITORIAL: Insurers pushing past affordability with rate-hike bids

Jul. 26—It's a sad state of affairs when the governor and the commonwealth's health-insurance oversight agency can claim victory by keeping the increase in the premiums that businesses and thousands of individuals in this state pay to just two or three times the health-care cost growth benchmark.

But that appeared to be the case after state regulators on Monday agreed to let some insurers raise their rates in 2026 anywhere from 7% to 12%.

Gov. Maura Healey touted the Division of Insurance's ability to renegotiate lower rate hikes for six health insurers, claiming it will save Massachusetts residents and businesses a projected $4.5 million in health-care premiums for 2026.

Regulators negotiated down those rate increases from one to three percentage points each.

And the DOI did draw the line at two of the most outlandish rate-hike requests, leaving those companies to appeal or resubmit more modest proposals.

The DOI approved rates for six insurers in the merged market, which provides a segment of the population with health insurance through individual and small business plans.

The department also rejected bids from Blue Cross Blue Shield of Massachusetts and WellSense Health Plan — the second- and third-largest carriers in the merged market, respectively — for seeking increases that regulators determined were beyond the pale, even in this inflationary atmosphere.

BCBSMA, which has about 166,000 merged market members, wanted to raise rates by an average of 12.9% next year. Executives previously said that sizable increase was due to rising costs charged by providers and the pharmaceutical sector, which had contributed to a $400 million operating loss in 2024 — the company's largest ever.

Officials reached similar conclusions about WellSense, also known as Boston Medical Center Health Plan, which proposed an average merged market rate increase of 16.2% for its more than 133,000 members.

Both insurers can file appeals within 10 days. Jay McQuaide, a senior vice president at BCBSMA, said his company intends to do so.

"All of us would like the rates to be lower. We care deeply about doing all we can to moderate the cost of health-care growth on the people this segment serves, which is small businesses and individuals," McQuaide told the State House News Service. "Yet in our case, we are seeing the cost of medical and pharmacy care grow at the fastest rate in 20 years."

McQuaide said it's the first time since 2010 that the state rejected BCBSMA's annual merged market rate increase proposal.

A WellSense spokesperson did not indicate Monday if the company will appeal, saying only that the carrier is "talking with the Department of Insurance and working closely with them to come to a resolution."

The six other insurers whose plans won approval collectively cover about 421,000 members.

Tufts Health, the largest merged market carrier with more than 187,000 customers enrolled, will be allowed to increase rates 11.1% next year, a sizable jump but smaller than the 13.2% the carrier originally sought.

DOI also approved rate increases of 7.1% for Fallon Health, 9.4% for Health New England, 12.2% for Harvard Pilgrim Health Care, 7.2% for Mass General Brigham Health Plan and 9.3% for United Healthcare.

The final rate increases could still be costly for many consumers. For five of the six carriers, the 2026 hike surpassed increases that took effect for 2025.

A health-care market oversight law Healey signed in January instructed DOI to determine whether proposed rates are "excessive" by considering "affordability for consumers and purchasers of health insurance products."

The office in March issued regulatory guidance calling on insurance carriers to limit the growth of deductibles and copays to the rate of medical inflation, or about 4.8%.

Small business industry leaders praised the administration's move to renegotiate six carrier rates and reject two others, especially at a time when industry pressures continue to mount. Insurance costs for individual and small business customers have been rising sharply in recent years amid a period of sustained spending growth in the health- care industry.

Health-care costs soared 8.6% from 2022 to 2023, more than double the state's cost-containment goal, prompting one top lawmaker to warn that the system is "falling apart."

Retailers Association of Massachusetts President Jon Hurst observed Monday that the original merged market rate increases proposed — an average of 13.4% across all carriers — were nearly four times higher than the health-care cost growth benchmark.

"The action by the Division of Insurance today is an important message to insurance companies, large hospital systems, and pharmaceutical companies that the economic damage to the Commonwealth's small employers, premium payers, and taxpayers must come to an end," Hurst said.

Christopher Carlozzi, Massachusetts state director for the National Federation of Independent Businesses, called the insurance division's rate decisions "a step towards recognizing the state's health insurance affordability problem that has plagued small businesses for decades now."

We usually blame the unsustainable rise in housing prices as the main reason for this state's high cost of living. However, the health-care costs that individuals, families and businesses must bear can be every bit as burdensome.

Add unemployment insurance costs to that list, and it's a wonder that any small business can turn a profit in this state.

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