New cap on split costs for patients

BY ALISON KUZNITZ AND MICHAEL P. NORTON State House News Service

Some Massachusetts residents could see more than $230 in average annual savings under a new state effort to restrict the growth of health insurance deductibles, copays and other out-of-pocket costs.

In 2027, health insurance companies must limit patient cost-sharing increases to 3.6 percent for the merged market where many individuals and smaller employers get insurance, Gov. Maura Healey’s office announced Monday.

The administration highlighted Feb. 27 guidance that the Division of Insurance issued to insurers, which faced a Friday deadline to submit proposed rate filings. Insurers were required to explain how their filings address "affordability for consumers and purchasers of health insurance products."

"Health care cost pressures are front and center, and this action protects families at a time when they need our assistance more than ever," Insurance Commissioner Michael Caljouw said in a statement.

Caljouw last week said insurance had become "increasingly out of reach and unsustainable" across the market.

A 2025 health care market oversight law strengthened Caljouw’s authority to monitor affordability within the merged market and gauge whether proposed rates are "excessive." Caljouw flexed that affordability lever last year when the DOI limited cost-sharing growth to 4.8 percent.

The latest restriction is expected to save patients an average of $232 annually, Healey’s office estimates.

"We know that families across Massachusetts are struggling to afford health care, and unpredictable out-of pocket costs are a major driver of that," Healey said. "Last year, I was proud to become the first governor in Massachusetts history to cap co-pays and deductibles, and now we’re lowering that cap even further. These will be the tightest limits in the country to make sure the people of Massachusetts can afford to get the care they need."

Jon Hurst, president and CEO of the Retailers Association of Massachusetts, said the state needs to more fully reform the merged market. As more businesses move to self-insured plans, fewer small businesses are paying to cross-subsidize individual health insurance plans, he said, and the latest move will push costs to premiums.

"I’m not feeling the love with this," Hurst told the News Service. "It’s not going to cut the cost of health insurance for a small employer and their workforce in Massachusetts. Premiums are going to go even higher."

Noting some of his association’s members are paying $47,000 a year for a family health insurance plan, Hurst said the state needs to "cap off exploding provider prices" that exceed a cost control benchmark.

"I think they understand that something is incredibly wrong, but they are playing at the margins," Hurst said.

The Massachusetts Health Connector Board in February decided to freeze 2027 deductible limits as part of their role in overseeing the details of insurance plans that meet minimum state standards. The limits are $3,200 for individuals and $6,400 for families.

Insurance regulators last week finalized regulations to scrap prior authorization requirements across a bevy of routine services, which are also expected to yield cost savings. Patients and providers are expected to benefit from the changes by the end of the year, Caljouw said.

Lora Pellegrini, CEO of the Massachusetts Association of Health Plans, has repeatedly urged state officials to address the underlying issues driving cost pressures, including rising hospital prices, outpatient facility costs and prescription drug spending. Insurers have stopped covering GLP-1 drugs that surged in popularity because they helped people lose weight, and the strategy appears to be helping to control health plan costs.

"While efforts to limit deductibles and copays may provide short-term relief at the point of service, they do nothing to address the root causes of rising health care spending," Pellegrini said in a statement Monday. "In fact, they risk exacerbating the problem by pushing more costs onto individuals and small businesses through higher premiums."