When Governor Maura Healey spoke to the Retailers Association of Massachusetts late last year, her promise to address health care costs drew the most applause of anything she said — even more than her pledge to shop local for the holidays.
Now, as health insurers file their small-business rates with the state Division of Insurance for the next year, the Healey administration is telegraphing one important way to fulfill that promise.
On Thursday, the Healey administration announced a new directive from insurance commissioner Michael Caljouw to the state’s health insurers, warning them that the state’s Division of Insurance will be scrutinizing “affordability” as part of the agency’s review of new rates for individual and small business plans.
The directive was issued to the industry in March, but was publicly announced on Thursday in advance of the Division’s next rate-setting process; the new insurance rates for the so-called “merged market,” which covers individuals and businesses with fewer than 50 employees, were due to be filed in time for a Thursday deadline. (Around 700,000 people are covered by health plans in this market.)
Specifically, Caljouw is expecting the insurers to explain how their newest filings address affordability in general, including how average member “cost sharing,” through deductibles or copayments, will not increase in 2026 beyond medical inflation in New England, identified at around 4.8 percent. In contrast, the administration said, deductibles for consumers have gone up by nearly 23 percent in the merged market during the past two years.
Division of Insurance officials are particularly worried that some people in the merged market might be deterred from even seeking necessary health care because deductibles are getting so high.
The new directive lines up not just with the promise Healey made to the retailers group; it also lines up with language recently added by the state Legislature to a law that governs how the merged market is overseen. While regulators have long had a responsibility to keep excessive costs in check during their rate reviews, this new law specifically calls out affordability as a key metric.
Jon Hurst, president of the retailers association, called the directive a good first step but said it doesn’t do much to fix what he sees are the underlying drivers behind health insurance inflation in Massachusetts: increased costs pushed by medical providers and drug companies.
“I think the governor gets it. I think this is an opening salvo [to] hopefully start the discussion,” Hurst said.
Ultimately, though, Hurst wants the Legislature to address costly mandates specific to Massachusetts that don’t apply to larger employers that self-insure — and only need to meet federal coverage mandates as a result.
“Mike Caljouw and DOI, they have to deal with the hands they’re dealt,” Hurst said. “Ultimately, Beacon Hill has dealt them … a provider-friendly hand, not a premium-payer-friendly hand.”
Massachusetts Health & Hospital Association chief executive Steve Walsh offered praise, saying the directive should provide much-needed cost relief for Massachusetts residents. He said he hopes the measure will also prompt more discussions around expediting prior authorizations that providers must get from insurers to ensure patients will be covered for certain kinds of care.
But the Healey administration’s directive drew pushback from the Massachusetts Association of Health Plans, which represents most major health insurers in the state.
“There is no question that the cost of care is placing a significant and growing burden on consumers and employers, but capping deductibles and copayments will not make care more affordable – it will simply shift costs into premiums, raising monthly expenses for everyone,” chief executive Lora Pellegrini said in a statement.
Pellegrini agreed with Hurst about the need to address what she called “ever-increasing prices” charged by hospitals and drug companies. She noted that health plans in the state already spend nearly 90 percent of the premiums they collect on medical care.
“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 fact, they risk exacerbating the problem by pushing more costs onto individuals and small businesses through higher premiums.”
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