Health insurance rates in Massachusetts are set to skyrocket, with eight commercial insurers proposing an average increase of 13.4% for 2026. This significant jump follows rate hikes of 5.3% in 2024 and 8.4% in 2025. The proposed increases affect the “merged market,” which covers around 721,400 individuals and small businesses, excluding government-run Medicare and Medicaid, as well as plans for larger companies.
The Human Impact
For individuals like Dayanne Leal, who recently lost her job and is looking to start her own business, the rising costs are particularly concerning. Leal testified at a public hearing, stating that she faces monthly premiums of $600 to $700 for individual plans. “Health insurance shouldn’t be the reason people abandon their dreams to start a new business,” she emphasized.
Causes of the Increase
The insurers attribute the proposed rate hikes primarily to rising medical and pharmacy claims. Medical claims are expected to increase by 8.4% in 2026, while pharmacy claims are projected to rise by 16.2%. The Massachusetts Association of Health Plans points to inflation and labor shortages as key factors driving health care providers to request higher reimbursement rates, with some hospitals seeking increases of 20 to 40%.
The Pharmacy Factor
The increased use of expensive brand-name and specialty drugs, including GLP-1 medications, is also contributing to the rise in pharmacy claims. While some plans intend to limit coverage for certain high-cost medications used for obesity treatment, they will continue to cover them for diabetes management.
Regulatory Response
The Division of Insurance has the authority to approve or reject the proposed rate increases. Governor Maura Healey’s administration has previously directed insurers to limit cost-sharing growth to the rate of medical inflation. Rejecting the proposed rates could lead to appeals and negotiations, potentially giving insurers leverage to renegotiate lower rates with healthcare providers.
Industry Challenges
Insurers argue that rejecting rate increases won’t solve the underlying issue of rising healthcare costs. The Massachusetts Association of Health Plans reported that the median total margin for state health plans was negative 1.06% in 2024, indicating that many health plans operated at a loss. Blue Cross Blue Shield of Massachusetts reported a record operating loss of $400 million last year.
Addressing the Issue
To mitigate rising healthcare costs, various solutions have been proposed, including capping prices for high-cost drugs and hospital services, offering limited-network insurance plans, eliminating “facility fees,” reducing government mandates, and simplifying prior authorization processes. The Legislature should consider these ideas and implement the most effective ones to make the healthcare system more sustainable.
