Health plans forced to scale back rate increases

BOSTON — State health regulators have pared back proposed health care plan rate hikes sought by commercial insurers next year, rejecting two proposals that called for double digit increases.

The state Division of Insurance announced Monday that it has “renegotiated” double digit rate increases proposed by six companies for merged group health plans offered to individuals and businesses with 50 or fewer employees.

Those health plans included Fallon Community Health Plan, Health New England, Harvard Pilgrim Health Care, Mass General Brigham Health Plan, Tufts Health Public Plans and United Healthcare.

Regulators said they also rejected proposed rate increases from Blue Cross Blue Shield of Massachusetts HMO Blue, Inc. and WellSense Health Plan for being “excessive,” the agency said. Both companies are expected to appeal the move.

Gov. Maura Healey said the move will save Massachusetts businesses and health care consumers more than $4.5 million a month for health insurance premiums.

“Massachusetts is a health care leader in this country – and we need everyone to do their part to lower costs,” Healey said in a statement. “While there is more work to be done, this is another important step that will better control costs for thousands of people and businesses.”

In June, the eight companies asked regulators to increase premium rates by an average of 13.4% next year for merged group health plans — far exceeding the state’s 3.6% benchmark for health care costs, and nearly double the increases sought by commercial health insurers last year.

Overall, the requested increases range from 9.9% to 16.2%. The average rate changes were 4.8% in 2024 and 7.8% in 2025, regulators said.

Insurers pointed to hospital and prescription drug costs — specifically the booming demand for new weight-loss and diabetes drugs — which they say are driving much of the rise in medical expenses for many employers.

Other factors driving up medical spending include the use of inpatient and outpatient services, an aging population, and the increased cost of prescription weight-loss medicines, the companies said in their filings to regulators.

The Healey administration didn’t say exactly how much the renegotiated merged market rates would reduce those proposed increases — but touted that 421,252 businesses and consumers would be saving up to $54 million a year in annualized premium costs.

Business leaders say the higher rates would add to mounting financial pressure on private employers that already includes rising labor and energy costs, as well as a paid family and sick leave law.

Chris Carlozzi, Massachusetts state director of the National Federation of Independent Businesses, welcomed the rate reductions as “a step toward recognizing the state’s health insurance affordability problem that has plagued small businesses for decades now.”

“Health insurance costs have consistently risen at unsustainable rates for Massachusetts small businesses and their workers,” Carlozzi said. “For too long employers have faced annual double digit premium increases as lawmakers focused on access to and quality of care over affordability.”

An NFIB survey of companies released in March detailed how 98% of small businesses in Massachusetts and other states are becoming concerned about whether they will be able to afford to continue offering health insurance in the next five years.

The report said average premiums for small businesses have skyrocketed by 120% in the last two decades, while average family plan premiums have increased by 129% for firms with 50 or fewer employees. Only 30% of small businesses still offer insurance, down from nearly 50% in 2000, the report’s authors said.

Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at cwade@cnhinews.com.

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