State caps health plan deductibles, copays

BOSTON — The Healey administration is capping health insurance plan copays and deductibles as part of broader efforts to reduce consumers’ medical costs.

The state Division of Insurance issued a regulatory bulletin Thursday requiring private health insurance companies to limit the growth of deductibles and copays for patients to the rate of medical inflation — or about 4.8% — effective immediately.

“Massachusetts families across the state are struggling with high health care costs,” Gov. Maura Healey said in a statement. “Deductibles and copays are a significant health cost driver, so we are taking action to limit those costs that come right out of the pockets of patients and families.”

Insurance Commissioner Michael Caljouw said deductibles charged to patients have gone up by nearly 23% in the merged market over the past two years — resulting in increased costs of over $200 per patient. He called the cap an “important step” to keeping those costs down for consumers.

“Deductibles and copays have been growing too fast — now outpacing wages and salary growth for our residents,” Caljouw said in a statement.

Massachusetts Hospital and Health Association President & CEO Steve Walsh praised the Healey administration for the “patient-centered” directive, saying it will provide relief for health care consumers who are struggling to afford the rising cost of care.

“This policy will provide much-needed cost relief for Massachusetts residents, while limiting the unimaginable losses hospitals and health care providers are enduring to deliver care to their patients and communities,” Walsh said in a statement.

“We hope this measure will also spark collaboration on administrative and prior authorization burdens, which cost the health care system billions and too often block patients from receiving the world-class care they deserve,” he added.

Not surprisingly, the move was opposed by the state’s private insurers who argue caps on copays and deductibles will ultimately be passed on to health care consumers in the form of higher monthly premiums.

The Massachusetts Association of Health Plans acknowledged that the cost of care is “placing a significant and growing burden on consumers and employers” but said capping deductibles and copayments “will simply shift costs into premiums, raising monthly expenses for everyone.”

“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,” MAHP President and CEO Laura Pellegrini said in a statement. “In fact, they risk exacerbating the problem by pushing more costs onto individuals and small businesses through higher premiums.”

The association attributes rising health care costs to “the ever-increasing prices charged by hospitals, providers, and pharmaceutical companies” and called for “structural” reforms that “hold all parts of the health care system accountable” for higher consumer costs.

Critics also pointed out that the cap on co-pays and deductibles is higher than the 3.6% benchmark for health care costs set by the Massachusetts Health Policy Commission, an agency that tracks health care spending.

The latest state data shows health care spending in Massachusetts grew by 8.6% from 2022 to 2023 — more than double the benchmark. Regulators attribute the spike, in part, to a 10% increase in net pharmacy spending and a $1.1 billion surge in hospital outpatient costs.

Massachusetts is one of the few states that requires individuals to have health care coverage, which is one of the state’s biggest expenses. Costs for the state’s Medicaid programs have doubled in the past decade, accounting for nearly 40% of state spending.

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