The Massachusetts Division of Insurance announced this week that health insurance rates will rise by an average of 7.9% beginning in 2021.
While health care advocates are decrying the higher-than-normal increase, insurance companies say the rate hikes are necessary because of uncertainty in the market — even as those same companies are expected to profit from the COVID-19 pandemic.
The rate hikes were part of the state’s quarterly rate review process of health insurance prices, during which carriers predict what their costs will be in the future and price their plans accordingly. The new pricing for 2021 will affect 463,116 across the state and is more than double the average increase last year.
Kevin Beagan, a deputy commissioner with the Massachusetts Division of Insurance, said the state “reluctantly” agreed to the higher-than-normal hikes because of the uncertainty caused by COVID-19.
"Every one of these companies, they highlighted the uncertainty associated with 2021," said Beagan. "The companies highlighted the uncertainty associated with vaccine costs, the uncertainty associated with more intensive care being needed because more individuals were putting off care, and also the increase that is going on in certain types of utilization, including behavioral health."
Beagan said the state was "definitely not happy with" the request from Tufts Health Plan, which was allowed the largest increase of 12.2%. Tufts provides low-cost health care as part of the Massachusetts Health Connector.
He added that the state did negotiate rate increases down by about one percent across the board.
Still, the hikes do not sit well with health care consultant Jed Constantz.
"If you have an opportunity to raise rates, why not? That's the nature of the beast," said Constantz. "The difference here is, unlike any other commodity, there often are choices that consumers can pick from in order to decide whether to bear that [raise]."
In health care, he said, consumers rarely have options.
Constantz said the 1 percent negotiation is not sufficient at a time when Americans are struggling to make ends meet, and he argues the state should have pushed back more.
“It's always been highly entertaining how ill-equipped state regulators are to push back,” he said. “And when they do push back, what do they get? Maybe a point or two concession, which is more of a public relations move than a sharpening of anybody's pencil."
Constantz said it’s especially galling because insurers are expected to announce a healthy boost in revenue for the second quarter.
Beagan couldn't say how much insurers have profited during the pandemic, but he expected that by the end of the year total health care spending will have dropped only about 5 percent from 2019.
Still, insurers maintain no one really has accurate information these days.
Blue Cross Blue Shield of Massachusetts, which covers some 80,000 residents in the state, has been granted a 5.4% increase.
"There is a great deal of uncertainty and volatility ahead as the COVID-19 pandemic evolves,” the company said in a statement to GBH News. "Some of our caution about the future comes from the potential combination of a COVID 'second surge' and the return of deferred services as hospitals adapt better to treating both COVID and non-COVID patients together."
