Health insurance premium increases in Massachusetts: More ways it can happen

Last week (ACA rollout hits some Massachusetts businesses harder than expected) I described how the implementation of Obamacare caused one small businesses’s Blue Cross Blue Shield of Massachusetts premium to jump by 29 percent for the upcoming renewal. The main issue was family size –previously only the first two kids were counted when calculating premiums, now it’s the first three kids. This group, with lots of kids, is paying the price.

After that I heard from two other BCBS MA customers who were experiencing big premium hikes. One is a two-family partnership where one family has two kids and the other has none. Their premium is up 17%. The second is a non-profit organization where the number of kids also shouldn’t be a deciding factor. Their premium increase is 26%.

Here’s what BCBS MA told me about these two:

The first group was a new customer entering its first renewal year. Initially, BCBS rated the company based on the expected –rather than actual– number of dependents. The rate was based on ~1.5 kids for one family and 0 for the other. (Something tells me they probably knew 1.5 was either too high or too low and not right on!) In any case, in a small group that is enough to make a significant difference in rates. With the ACA, health plans have to gather the dependent info even for new customers.

For the non-profit organization, the number of members covered declined from 12 to 7, which pushed them into a more expensive rate per member. (Even though rating based on group size is being phased out, it’s still a significant factor.) In addition, the group’s prior year increase had been tempered under a state law that limited the rates of increase for renewals. The ACA overrides the state’s rule and BCBS tells me they are unable to cap this year’s rate increase.

For what it’s worth, BCBS tells me that the median rate increase in the merged (individual + small group market) this year is 5-6%, which means these three examples are outliers. They also tell me that rate increases a year from now should be in the low single digits for all three of these customers and others like them.

I’d be interested in hearing from other Massachusetts customers of Blue Cross and other plans. Have your rates jumped? Are they steady? Did they fall? Do the explanations above seem to account for what’s happened to you?

Leave a note in the comments or mention on Twitter @HealthBizBlog.

By healthcare business consultant David E. Williams of the Health Business Group

7 thoughts on “Health insurance premium increases in Massachusetts: More ways it can happen

  1. dewe67 Post author

    InsureBlog’s Hank Stern, LUTCF, CBC shared the following comment with me via email:

    Great post, David!

    “They also tell me that rate increases a year from now should be in the low single digits for all three of these customers and others like them.”

    And you believe this…why?

    Not trying to be a wise-a$$, but NO carrier *knows* what rates are going to be a year from now, and I am *extremely* skeptical of prognostications based on today’s environment vs 2015 (when so many more ACA reg’s come into play).

    I’m even *more* skeptical that this comes from BX – not a carrier with a stellar record for competence.

    Reply
  2. dewe67 Post author

    Thanks for the comment, Hank. We’ll see in a year’s time whether they’ve called it right or not. I was a little surprised they were so sure –but sure they were.

    Reply
  3. Jim Nole

    Hello Dave; we are a small, 4 person high-tech company in Burlington (two family policies, two individual). I was just told our rates will increase for BC HMO Blue 22%! I really have to understand how that could be possible. Worst years have shown 7-9% increases…so where is this coming from? Without going into the fine details, when MA went to mandatory insurance wasn’t it the basic premise that more people paying in would lower or at least stabilize the premiums?

    Reply
  4. Theo01237

    Our rates are going up 40% for 2015. If we want to stay at our current payment amount, our deductibles will triple. If we want to keep our current program, our premiums will go up 40%. Working for a medium sized New England bank.

    Reply
  5. JOHN SULLIVAN

    WE ARE A SMALL FIRM IN HAVERHILL. WE ONLY HAVE TO COVER 2 EMPLOYEES. HOWEVER, THE PREMIUMS ARE GOING UP 33%. WHY THE HUGE INCREASE?

    Reply
    1. dewe67 Post author

      Can’t say for sure. In our case the big boost was due to larger than average # of dependents per family. Do the 2 employees have more than 2 kids each?

      Reply
  6. Peter D

    Seeing a 37% increase on a “Gold Plan” resulting from increase from two children to 3 (added college grad < 26 years old).

    Reply

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