Why It Matters
Massachusetts small businesses and their employees are facing a second consecutive year of double-digit health insurance premium increases, intensifying an affordability debate that has become central to state politics. The proposed hikes hit hardest in the state’s “merged market,” where small employers and individual policyholders pay substantially higher rates than large commercial plans. As the state already carries some of the highest health insurance premiums in the nation, the new proposals are drawing sharp criticism from business groups and raising political stakes for incumbents heading into an election year.
What Happened
The Massachusetts Division of Insurance released insurer filings late on a Friday afternoon showing that health plans collectively are requesting premium increases averaging nearly 13 percent for 2027 in the merged market, which covers close to 700,000 members. The proposals represent the opening round of a regulatory process expected to unfold over several months, with state officials having the authority to negotiate and reduce the final approved rates.
Blue Cross Blue Shield of Massachusetts, the largest insurer in the merged market, is seeking a 15.3 percent increase. Fallon Community Health Plan, which covers just under 30,000 enrollees, submitted the steepest request at 25 percent. Boston Medical Center Health Plan and Tufts Health Public Plans each proposed increases of roughly 12 percent. Harvard Pilgrim Health Care put forward the most modest request at 6.7 percent — still well above the current rate of inflation.
Even if regulators trim the proposals through negotiation, as they did last year when an initial 13.4 percent average request was reduced to 11.5 percent, the final approved rates are likely to represent a significant cost increase for small employers and their workers.
By the Numbers
- ~13% — average premium increase sought by merged market insurers for 2027
- 15.3% — increase requested by Blue Cross Blue Shield of Massachusetts, the market’s largest insurer
- 25% — the highest proposed hike, submitted by Fallon Community Health Plan
- 11.5% — the average increase regulators approved last year after negotiations
- $28,150 — average Massachusetts family health insurance premium in 2024, up from roughly $7,300 in 2000
Voices From the Business Community
Eileen McAnneny, president of the Employer Coalition on Health, said employers have reached a breaking point. “Double-digit rate increases again this year, in the midst of an affordability crisis, are unacceptable,” she said, warning that smaller businesses may be unable to continue offering coverage at all.
Jon Hurst, president of the Retailers Association of Massachusetts, said the proposed hikes could push some small businesses to pay well above $50,000 annually to cover a single family’s health insurance — unless they shift to high-deductible plans. Hurst placed blame squarely on state lawmakers and the governor rather than insurers or pharmaceutical companies. “You have to look in the mirror and blame yourselves if you’re Beacon Hill,” he said, arguing that state leaders have failed to take meaningful steps to curb costs or create fairness for small employers.
Lora Pellegrini, president of the Massachusetts Association of Health Plans, which represents insurers, attributed the requested increases to rising costs across the health care system, including a growing share of services delivered in higher-cost settings and escalating drug prices.
Zoom Out
Massachusetts has long ranked among the most expensive states for health coverage, a legacy partly tied to the 2006 health reform law that restructured how individual and small-group markets operate. Premiums in the state have consistently grown faster than the national average, and the merged market structure compounds those pressures for small employers. Across the country, small businesses have faced steeper premium trajectories than large employers, who have more leverage to negotiate rates and spread risk across larger pools of workers.
What’s Next
The Division of Insurance will review the filings and engage in a negotiation process with insurers before setting approved rates. Gov. Maura Healey’s administration did not respond to the filings publicly before a holiday weekend. Last year, Healey called similar proposals “simply unsustainable.” Her office had recently issued regulatory guidance requiring insurers to limit growth in copays and deductibles — a move some business advocates say will only shift costs back into premiums rather than reduce the overall burden. Final approved rates are expected to be settled before the 2027 plan year begins.