Why Is Health Insurance In Massachusetts So Burdensome?
Small businesses and individuals in Massachusetts can expect their health insurance premiums to rise by double digits over the next six months which is nearly twice the pace of last year. On average, small businesses can expect 8.2% increase in cover that will be renewed on October 1 of this year. The rate increase will affect 106,426 individuals who are from companies that employ less than 50 people. Members who are covered by Blue Cross Blue Shield’s HMO Blue Plan can also expect a 4.6% increase by October 1 compared to the 8% a year ago.
Massachusetts Division of Insurance also announced that the Harvard Pilgrim HMO Plan with more or less 30,000 members will increase its rates by 14.2% while the rates of Neighborhood Health Plan coverage are scheduled to be increased by at least 18%. New rates were also announced for individuals who will get cover for 2017. Individual plan rates are set to increase by 6.7% on the average for 16 plans. The increase will affect an estimated 268,000 individuals. Similarly, rates for Harvard Pilgrim and Neighborhood Plan will also increase by 15% and nearly 19% respectively.
Why are premiums so burdensome? The rise in premiums is due to higher drug costs and medical costs. According to Chris Goetcheus of Insurance Division, plans with healthier populations have to make payments in millions of dollars for those less healthy members under the federal Affordable Care Act. In fact Wellesley-based Harvard Pilgrim has announced a net loss of $34.2 million for the first 6 months of 2016 on their revenue of $1.6 billion. The insurance company has cited concerns over the rising costs of pharmaceuticals and the Affordable Care Act. Another company, Aetna has announced that it would drop off insurance exchanges in some states because it has become relatively unprofitable.
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