Justification for 2018 Rate Increases

Health New England is filing rates for Individual and Small Group medical plans in Massachusetts effective January 2018 through December 2018. In accordance with the requirements of Section 1003 of the Patient Protection and Affordable Care Act, below are the justifications for these 2018 rate increases.

The average rate increase effective January 1, 2018 was 6.8%; which can vary for a specific member or group depending on the plan of benefits chosen, member’s age or group demographic makeup and service area. The key drivers of the increases were:

  • Medical service costs – mostly driven by the annual provider reimbursement increases;
  • Utilization of services – the impact was much smaller compared to the growing costs;
  • Medical benefits – in aggregate, benefit changes would have reduced the HNE rates, however, for particular benefit plans the rate increases reflected the richness of benefits;
  • Reduction in federal subsidies for the low-income members that was only partially offset by the increased payments from the state;
  • In aggregate the administrative costs grew, mostly due to reduced pharmacy rebates and the inclusion of the Connector user fees. Some of these costs were directed toward quality improvement and reduction in waste and abuse.