Massachusetts Health Care Cost Trends – Premiums and Expenditures

Commonwealth of Massachusetts
Health and Human Services, May 2012

The premium trends section of the report discusses trends in premiums paid by employers and consumers for health insurance, and the medical expenses and retention charges included in premiums. The analysis shows that the growth of premiums has slowed in recent years, although small groups continued to experience the highest adjusted premium rates and increases, and overall premium increases continue to outpace inflation. The slowing growth of premiums in Massachusetts is consistent with a national trend, suggesting that macroeconomic factors beyond the Commonwealth may be partially responsible. In addition, there is evidence that group purchasers are selecting insurance packages with fewer benefits or higher cost sharing requirements, a phenomenon known as “benefit buy-down.” Buy-down can result in lower observed premiums, but may reduce access to care or increase out-of-pocket expenditures.

To no surprise, group purchasers in Massachusetts are engaging in “benefit buy-down” of health plans, which reduces access to care and increases out-of-pocket expenses for patients. Since the policies of the Affordable Care Act are very similar to the Massachusetts program, we can anticipate an acceleration of a national trend of benefit buy-down, establishing underinsurance as the new standard for the nation.

It doesn’t have be this way.