People across Massachusetts will see an unwanted change in the cost of their health insurance in the new year: Premiums will rise, and at a faster rate than in recent years.
The state’s largest health insurers, Blue Cross Blue Shield of Massachusetts and Point32Health, told WBUR that their customers can expect an average increase of 8 to 10%.
Health plans and costs vary widely from employer to employer, so some companies and their employees will see smaller increases, while others will experience cost spikes of up to 15%.
These average increases far exceed the typical rate of inflation – and the annual wage increases that most people receive.
“It’s just not sustainable,” said Neil Abramson, a Leominster retailer who offers insurance to his 30 employees. “Nothing else has gone up this much, even with the crazy inflation we’ve seen in recent years. No other business expense has increased this much.”
Sarah Iselin, CEO of the state’s largest insurer, Blue Cross Blue Shield of Massachusetts, said premiums for Blue Cross customers are rising at the highest rate in a decade.
“I think this is some kind of flashing red light. We have to wake up and pay attention.”
Eileen McAnneny, Employer Coalition for Health
The cost increases, which come nearly five years after the COVID pandemic began, 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; an increase in the number of prescriptions for expensive drugs; and inflation.
Insurers said a 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) medications include Wegovy, Ozempic, and Mounjaro, and have list prices of approximately $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 will grow even further next year,” says Iselin. About 2,000 Blue Cross members begin taking these medications each month.
These injectable medications are unusual because they are pricey – and have the potential to become widely used. According to a study, more than 1.5 million people in Massachusetts are obese analysis from the state Health Policy Commission, and spending on these drugs is expected to continue to rise, especially as they are 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 medications, as well as other medications and services. Insurers save money when they limit access to expensive treatments.
“We want to ensure that our members receive the most appropriate care – but we must also ensure that our customers are not overwhelmed by this dramatic increase in spending on these medications,” Iselin said.
Pharmaceutical industry representatives defended the weight-loss drugs as revolutionary, arguing that they keep patients healthy and out of hospitals.
“Every year, insurers raise premiums and then try to blame someone else,” said Sarah Ryan, spokesperson for Pharmaceutical Research and Manufacturers of America, or PhRMA.
Healthcare providers also often clash with insurers over costs. Providers and insurers conduct negotiations behind closed doors to determine payment rates, usually every three years. Doctors and hospital groups typically demand higher rates, while insurers object to large rate increases.
Sometimes they can’t resolve their disputes, and patients must look for new insurance plans or change doctors to continue receiving their medical care. Earlier this year, Point32Health failed to reach an agreement with Boston Children’s Hospital and UMass Memorial Health, disrupting thousands of patients.
Point32Health is the parent company of the Tufts and Harvard Pilgrim health plans.
“From our perspective, it is difficult to continue paying more as we continue to drive the spiral of lack of healthcare affordability,” Eileen Auen, executive chairman of Point32Health, 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 more than doubling its spending on weight-loss and diabetes medications, Point32Health said it is paying more for cardiac procedures, orthopedic surgeries and behavioral health appointments.
Hospital leaders, in turn, say they need higher reimbursements because their costs for supplies and labor have escalated. Many hospitals are losing money as they struggle to meet 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 pushing them deeper into the red, making care delivery more challenging than ever and threatening their survival.” threatened. .”
This cost pressure is built into the prices consumers pay. In addition to the premiums, which are typically shared between 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.
A man logs into the Health Connector website, where Massachusetts residents can apply for health insurance. (Robin Lubbock/WBUR)
The vast majority of Massachusetts residents – 98% – have health insurance, either through private plans or the government programs Medicare or Medicaid.
But 41% of residents say they have had trouble paying for health care, according to the results of a 2023 survey from the state Center for Health Insurance and Analysis. Nearly a third of respondents said they or a family member foregone 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 companies concerned about health care costs.
Many people are understandably concerned about the high cost of housing in Massachusetts, but health care costs are just as pressing, McAnneny said. She said state policymakers must take action to drive down costs — or Massachusetts’ economic competitiveness is at stake.
“I think this is kind of like a flashing red light,” she said. “We have to wake up and pay attention.”