At this point, it should come as no surprise to industry experts or consumers alike that health insurance rates are rising from one year to the next. However, one state where those cost increases have stayed relatively muted is now expected to see a jump that is at least somewhat bigger than people living there might have anticipated.
The cost of health coverage for people on small group and individual plans at the start of 2016 will likely increase 6.3 percent in Massachusetts next year, in comparison with those seen in the first quarter of 2015, according to the latest mandated quarterly evaluation of health insurance rates by the Massachusetts Division of Insurance. That, obviously, includes some companies which are raising costs by more than that average amount, while others are keeping their rate hikes below the average.
What's causing it?
Perhaps not surprisingly, the biggest reason for higher health insurance costs in the Bay State next year will - much like other places across the country - be driven by higher costs for prescription drugs, the report said. Since the passage of the health care laws, and even before that, more and more people were being prescribed expensive brand-name medications that led to significantly ballooning costs for insurers, and that trend has only grown more prevalent in recent years.
Likewise, this comes at a time when more people are utilizing health insurance as a result of the federal mandate that requires all consumers carry such coverage, the report said. Because of this, insurers are generally facing more costs, and are therefore likely to raise rates to help them cover those expenditures. Further, there are internal costs that insurers face related to enrolling so many new people - millions per year nationwide - on new plans for what could be the first time ever. This could also lead to the need for those companies to impose higher costs, at least for the time being.
Who will be impacted?
In the state of Massachusetts alone, there are more than 300,000 people who have coverage individually or through small group plans and will be renewing their policies during the first quarter of next year, the report said. In conclusion, the Division of Insurance wrote that it, "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." Given the state's track record on being leaders in health care coverage innovation, insurers might have an easier time doing so there than in other parts of the country.
Regardless, this is something that health insurers will have to monitor closely not only for next year, but several years from now as well. Unforeseeable health care cost increases can arise as a result of any number of issues, and being prepared to face expected and unexpected increases will be crucial for insurers.