Health insurance rates to spike for 300,000 in Mass. merged market

Printed from: http://newbostonpost.com/2015/08/27/health-insurance-rates-to-spike-for-300000-in-mass-merged-market/

Written by Michael P. Norton

STATE HOUSE — Health insurance base rates are poised to spike for about 300,000 people in Massachusetts.

Division of Insurance regulators, who recently reviewed small group and individual plans in the so-called merged market, concluded that base rates will increase by an average of 6.3 percent in January for the first quarter of 2016 over rates in effect during the first quarter of 2015.

The division’s website includes a link to an information sheet on the rate increases and a spokeswoman, in response to a News Service inquiry, said the information had been posted on Friday.

The increase exceeds the state’s 3.6 percent benchmark for overall annual health care cost growth. In December 2014, the state Health Policy Commission estimated overall health care cost growth in 2014 to be just 2.3 percent, news that was welcomed by public and private sector interests with longstanding concerns about health care costs.

Commission chair Stuart Altman warned in February that important aspects of the health care delivery system have not changed since passage of a 2012 health care cost control law, and said forces that helped keep cost escalation down recently may not be repeated.

A state insurance official, who was not authorized to speak on the record, confirmed that small group rates rose 6.2 percent in the second quarter and 6.8 percent in the third quarter of 2015, compared to a year earlier. Increases in prior quarters were roughly 3 percent or 4 percent, the official said.

Higher drug costs, increased use of health services, and costs associated with federal Affordable Care Act requirements are the primary drivers behind the higher rates, according to insurance officials.

“The Division of Insurance recognizes that escalating health insurance costs are a burden on employers and employees alike, and continues to push carriers to be diligent in looking for new and more effective cost containment solutions,” the division wrote.

Insurers are seeing “much higher levels of demand for expensive brand name prescription drugs” to treat conditions like hepatitis, according to the division, and manufacturers of many brand name drugs “have imposed double digit cost increases in recent months.”

Regulators say insurance plan utilization has increased and costs for inpatient and outpatient services “have been increasing at a level that is significantly higher than in prior periods.”

The state insurance official said there are 700,000 to 800,000 people in the merged market and the expected rate increases apply only to those covered in small groups that are set to renew coverage during the first quarter of 2016.

Insurers have reported higher prescription drug costs associated with treatment of cholesterol and conditions that are more widespread, the official said.

Copyright State House News Service

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