HUNDREDS OF THOUSANDS of small business employees and other individuals will need to shoulder another double-digit increase in health insurance premiums next year, albeit one that’s not quite as dramatic as originally proposed following action by the Healey administration.
The Division of Insurance on Tuesday published final rates for seven health plans that will take effect in 2027 for the so-called merged market, averaging out to a 10.4 percent bump over the current year’s rates.
It could have been even steeper. The proposals insurers filed in May sought average premium increases of 12.9 percent, but state officials negotiated with the carriers to sand off the edges and pare back the increases by a couple of points.
The Division of Insurance also outright rejected the proposed increase from Fallon Community Health Plan, one of the smallest carriers, which sought to raise premiums more than 25 percent. Fallon has the right to appeal the decision, and if they do so, the hearing will focus on whether there’s enough evidence to support DOI’s decision. A spokesperson did not say explicitly Tuesday whether the company would do so.
“We respect the Division of Insurance’s decision and look forward to continuing our discussions with them as the review process moves forward,” said Fallon spokesperson Melissa Randall.
She said Fallon has worked to limit premium increases and is “focused on balancing affordability and long-term sustainability.”
Regardless of whether Fallon appeals, the insurer can continue to work with the DOI to find agreement on a rate increase that regulators deem more appropriate.
Gov. Maura Healey, who has made affordability a central theme of her reelection campaign, trumpeted the talks as a success, saying the negotiations will save Bay Staters $72 million they otherwise would have paid under the initially forecast increases.
“Massachusetts residents and businesses are already struggling with the high cost of health care. Nobody can afford massive increases in their health insurance premiums on top of that,” Healey said in a statement.
Still, 2027 will mark the second straight year with a double-digit rate increase for merged market premiums, well outpacing both inflation and the 3.2 percent rate growth from just a few years ago.
Officials similarly took a bit of the sting out of the rate hikes last year. Insurers initially sought premium increases for 2026 averaging 13.4 percent, but after negotiations with the state, they settled on growth of about 11.5 percent.
The merged market is a relatively small subset of the health insurance universe, especially compared to the larger commercial market or to public plans like MassHealth. It involves nearly 700,000 members who get their coverage as individuals or from small employers.
Insurance costs, and health care more broadly, continue to pose an increasing burden for Bay Staters. From 2000 to 2024, the average family health insurance premium nearly quadrupled to $28,150, according to data tracked by the state Health Policy Commission.
Costs are often even higher in the merged market due to compounding regulatory changes. Jon Hurst, president of the Retailers Association of Massachusetts, said the originally proposed rate increases would have required many small businesses to pay more than $50,000 for a single family’s health insurance in 2027.
