People across Massachusetts will see an unwelcome change in their health insurance costs in the new year: Premiums will rise, and at a faster rate than in years past.
The state’s largest health insurers, Blue Cross Blue Shield of Massachusetts and Point32Health, told WBUR their customers can expect average increases of 8% to 10%.
Health plans and costs vary widely from one employer to another, so some businesses and their workers will see smaller increases, while others will face cost spikes as high as 15%.
These average increases far exceed the typical pace of inflation — and the annual pay raises that most people receive.
“It’s just not sustainable,” said Neil Abramson, a retailer in Leominster who offers insurance to his 30 employees. “Nothing else has gone up that much, even with the crazy inflation we’ve experienced the last few years. No other business expense has gone up like that.”
Sarah Iselin, chief executive of the state’s largest insurer, Blue Cross Blue Shield of Massachusetts, said premiums for Blue Cross customers are rising at their highest rates in a decade.
“ I think this is kind of a flashing red light. We need to wake up and pay attention.”
Eileen McAnneny, Employer Coalition on Health
The cost hikes, coming nearly five years after the start of the COVID pandemic, are the result of a combination of factors, according to insurers, health care providers and state health officials. These include increased use of health care services, higher prices for medical services, a surge in prescriptions for expensive medications and inflation.
Insurers said one major driver of higher premiums is the growing popularity of a relatively new class of injectable drugs to manage diabetes and weight loss. These glucagon-like peptide-1 (GLP-1) drugs include Wegovy, Ozempic and Mounjaro, and have list prices of roughly $1,200 per person per month.
Blue Cross spent $75 million on these drugs in 2023, and this year the cost nearly tripled — to $200 million.
“We think it’s going to grow even more next year,” Iselin said. About 2,000 Blue Cross members begin to take these drugs every month.
These injectable drugs are unusual in that they are pricey and have the potential to be very widely used. More than 1.5 million people in Massachusetts have obesity, according to an analysis from the state Health Policy Commission, and spending on these drugs is expected to continue soaring, particularly as they’re tested for additional conditions ranging from kidney disease to Alzheimer’s.
In response to this trend, health insurers said they are reviewing their coverage policies for weight loss drugs — as well as other drugs and services. Insurers save money when they limit access to expensive treatments.
“We want to ensure that our members get the most appropriate care — but we also have to make sure that our customers are not overwhelmed by this dramatic spending increase for these drugs,” Iselin said.
Representatives of the pharmaceutical industry defended the weight loss drugs as revolutionary, arguing they help keep patients healthy and out of hospitals.
“Every year, insurers raise premiums and then try to blame someone else,” said Sarah Ryan, a spokesperson for Pharmaceutical Research and Manufacturers of America, or PhRMA.
Health care providers also tend to clash with insurers on costs. Providers and insurers hold closed-door negotiations to set payment rates, usually every three years. Doctors and hospital groups typically demand higher rates, while insurers object to big rate increases.
Sometimes, they can’t resolve their disputes, and patients are left scrambling to find new insurance plans, or switch doctors to continue their medical care. Earlier this year, Point32Health failed to reach agreement with Boston Children’s Hospital and UMass Memorial Health, disrupting thousands of patients.
Point32Health is the parent company of Tufts and Harvard Pilgrim health plans.
“From our perspective, it’s hard to continue to pay more because we’re continuing to drive the spiral of lack of affordability of health care,” Eileen Auen, Point32Health’s executive chair, told the Health Policy Commission last month.
Still, Point32Health members will face higher premiums next year, the company said in a statement to WBUR. In addition to a more than doubling spending on weight loss and diabetes drugs, Point32Health said it's paying more for heart procedures, orthopedic surgeries and behavioral health appointments.
Hospital leaders say they need higher reimbursements because their costs for supplies and labor have been escalating. Many hospitals are losing money as they struggle to keep up with the demand from sick patients.
Karen Granoff, senior director of managed care policy for the Massachusetts Health & Hospital Association, said hospitals “are facing a growing list of cost pressures that are plunging them deeper into the red, making care delivery more challenging than ever, and threatening their very survival.”
These cost pressures get built into the prices consumers pay. In addition to premiums, which are typically shared by employers and employees, and deducted from paychecks, patients often have to pay out of pocket when they visit a doctor or need a test or procedure.
The vast majority of Massachusetts residents — 98% — have health insurance coverage, either through private plans or through the government programs Medicare or Medicaid.
But 41% of residents say they’ve had trouble affording health care, according to a 2023 survey from the state Center for Health Insurance and Analysis. Nearly one-third of people surveyed said they or a family member were forgoing medical care because of the cost.
“I don’t think crisis is too strong a word,” said Eileen McAnneny, president of the Employer Coalition on Health, which represents Massachusetts businesses concerned about health care costs.
Many people are understandably concerned about the high cost of housing in Massachusetts, but health care costs are equally urgent, McAnneny said. She said state policymakers need to take action to bring down costs — otherwise, Massachusetts’ economic competitiveness is at stake.
“ I think this is kind of a flashing red light,” she said. “We need to wake up and pay attention.”
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