Commissioner Michael Caljouw Disapproved Rate Increases for Blue Cross Blue Shield of Massachusetts HMO Blue, Inc. and WellSense Health Plan
JULY 21, 2025…..Two of the largest health insurance carriers must either appeal or go back to the drawing board after state regulators on Monday rejected their proposed rate hikes as excessive, while hundreds of thousands of Massachusetts residents on other plans will see their premiums increase by 7% to 12% next year.
The Division of Insurance approved 2026 rates for six insurers in the merged market, which provides a subset of Bay Staters with health insurance through individual and small business plans. Costs will rise for customers on all six of those carriers, albeit with less growth than the companies originally proposed, following negotiations with state regulators and scrutiny from figures including Gov. Maura Healey.
The department also rejected proposals from Blue Cross Blue Shield of Massachusetts and WellSense Health Plan — the second- and third-largest carriers in the merged market, respectively — for seeking increases that regulators dubbed too large.
BCBSMA, which has about 166,000 merged market members, sought to increase rates by an average of 12.9% next year. During a public hearing last month, executives said the hike was necessary to offset rising costs charged by providers and the pharmaceutical sector, which had contributed to a $400 million operating loss in 2024 — the company’s largest ever.
Regulators said BCBSMA’s proposal overestimated the pressures the insurer could face from medical and pharmacy trends, leading to “excessive” rate increases. DOI also said a projected 1.9% surplus contribution “appears to be higher than necessary and suggests that BCBSMA could do more to promote consumer affordability.”
Officials reached similar conclusions about WellSense, also known as Boston Medical Center Health Plan, which proposed an average merged market rate increase of 16.2% for its more than 133,000 members.
Both insurers can file appeals within 10 days. Jay McQuaide, a senior vice president at BCBSMA, said his company intends to do so.
“All of us would like the rates to be lower. We care deeply about doing all we can to moderate the cost of health care growth on the people this segment serves, which is small businesses and individuals,” McQuaide said in an interview. “Yet in our case, we are seeing the cost of medical and pharmacy care grow at the fastest rate in 20 years.”
McQuaide said it’s the first time since 2010 that the state rejected BCBSMA’s annual merged market rate increase proposal. That year, the administration of Gov. Deval Patrick waged a protracted battle with multiple insurers over their attempts to hike rates significantly that wound up in court.
A WellSense spokesperson did not signal Monday if the company will appeal, saying only that the carrier is “talking with the Department of Insurance and working closely with them to come to a resolution.”
The six other insurers whose plans won approval collectively cover about 421,000 members. Regulators negotiated down those rate increases by between one and three percentage points each.
Tufts Health, the largest merged market carrier with more than 187,000 customers enrolled, will be allowed to increase rates 11.1% next year, a sizable jump that’s smaller than the 13.2% the carrier originally sought.
DOI also approved rate increases of 7.1% for Fallon Health, 9.4% for Health New England, 12.2% for Harvard Pilgrim Health Care, 7.2% for Mass General Brigham Health Plan and 9.3% for United Healthcare.
Healey, who last month said the original merged market proposals reflected the fact that health care costs “are simply unsustainable,” suggested Monday the renegotiated rates could save a combined $4.5 million.
“Health care costs are too high, and today’s actions will save families and businesses $4.5 million from what the insurers attempted to charge,” Healey said in a statement. “Massachusetts is a health care leader in this country – and we need everyone to do their part to lower costs. While there is more work to be done, this is another important step that will better control costs for thousands of people and businesses.”
The final rate increases could still be costly for many consumers. For five of the six carriers, the 2026 hike is steeper than increases that took effect for 2025.
A health care market oversight law Healey signed in January instructed DOI to determine whether proposed rates are “excessive” by considering “affordability for consumers and purchasers of health insurance products.”
The office in March issued regulatory guidance calling on insurance carriers to limit the growth of deductibles and copays to the rate of medical inflation, or about 4.8%.
Small business industry leaders praised the administration’s move to renegotiate six carrier rates and reject two others, especially at a time when industry pressures continue to mount. Health care costs soared 8.6% from 2022 to 2023, more than double the benchmark that represents the state’s cost-containment goal, prompting one top lawmaker to warn that the system is “falling apart.”
Retailers Association of Massachusetts President Jon Hurst observed Monday that the original merged market rate increases proposed, an average of 13.4% across all carriers, were nearly four times higher than the health care cost growth benchmark.
“The action by the Division of Insurance today is an important message to insurance companies, large hospital systems, and pharmaceutical companies that the economic damage to the Commonwealth’s small employers, premium payers, and taxpayers must come to an end,” Hurst said. “Year after year of excessive premium increases and tax expenditure increases, triggered by provider reimbursement demands, and costly utilization trends towards the highest cost providers, must all come to an end if the competitiveness of the Commonwealth is truly a public policy priority.”
Christopher Carlozzi, Massachusetts state director for the National Federation of Independent Businesses, called DOI’s suite of actions “a step towards recognizing the state’s health insurance affordability problem that has plagued small businesses for decades now.”
“Health insurance costs have consistently risen at unsustainable rates for Massachusetts small businesses and their workers,” Carlozzi said. “For too long employers have faced annual double digit premium increases as lawmakers focused on access to and quality of care over affordability.”
