Commercial Insurance: Premiums and Member Cost-Sharing


Key Annual Report
Commercial Insurance Premiums Finding

Health Care Premiums in Massachusetts

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Key Annual Report
Member Cost-Sharing Finding

Health Care Member Cost-Sharing in Massachusetts

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CHIA collects annual commercial health insurance premiums data from health care payers, allowing for insights into the costs borne by both Massachusetts employers and employees. CHIA also monitors high deductible health plan enrollment and consumer cost-sharing over time. These measures are reported in CHIA's Annual Report on the Performance of the Massachusetts Health Care System.

 

Commercial Insurance Premiums

Commercial Insurance Premiums are costs borne by the majority of individuals under 65 years old, both in Massachusetts and nationally. These individuals are usually enrolled in employer sponsored insurance, where both the employer and the employee make premium contributions to a commercial payer for an employee’s health plan. Health care payers use the premiums to pay for their member's medical expenses. Payers also retain a portion of the premium to cover administrative expenses, reserves, commissions, contributions to surpluses and profits, premium taxes, and medical management expenses.

Note that health insurance premiums are set prospectively based on historical data and projected growth in claims and administrative costs. This means that premium rates for plans issued in 2020 were developed without knowledge that the COVID-19 pandemic would have on health care utilization and spending. In Massachusetts, payers are required to meet minimum MLR thresholds of at least 88% in the merged market and 85% for larger employer plans. These requirements serve as guardrails to keep health plan administrative costs in check, especially in years when claims costs come in below actuarial projections.

 

Commercial Insurance Member Cost-Sharing

Commercial Insurance Member Cost-Sharing includes all medical expenses allowed under a member’s plan but not paid for by the payer or employer (e.g., deductibles, copays, and co-insurance). CHIA also reports on member cost-sharing by market sector, product type (HMO, PPO, POS), funding type, and benefit design type (HDHP, tiered network, limited network).

Cost-sharing and affordability data are also included in findings from CHIA’s Massachusetts Health Insurance Surveys (MHIS). The survey findings reflect the impacts of medical costs on Massachusetts households with all forms of insurance coverage (including private commercial, MassHealth, and Medicare) as well as the uninsured.

Please note: Figures in CHIA's Annual Report are inclusive of members who incurred little to no medical costs as well as those who may have experienced substantial medical costs. However, these figures do not include out-of-pocket payments for goods and services not covered by the members’ health insurance policies (e.g.,over-the-counter medicines, vision, and dental care). Member cost-sharing reflects the impact of state and federal Cost-Sharing Reduction (CSR) subsidies and does not account for employer offsets, such as health reimbursement arrangements or health savings accounts.

 

 

Key Premiums and Member Cost-Sharing Findings from CHIA's Annual Report on the Performance of the Massachusetts Health Care System (March 2022)

  • Between 2019 and 2020, fully-insured premiums increased by 2.6% after growing 2.3% in the prior year.

 

  • The average fully-insured premium in 2020 was $529 PMPM. Premium rates were developed without knowledge of the impact that the COVID-19 pandemic would have on health care utilization and spending.

 

  • All market sectors experienced average annual premium increases between one and four percent in 2020.

 

  • Members covered through larger employers had higher premiums and higher benefit levels.

 

  • Between 2019 and 2020, private commercial member cost-sharing experienced an unprecedented 17.2% decline as health care utilization decreased due to the COVID-19 pandemic.

 

  • Member cost-sharing decreased faster than payer-paid claims did, likely due to utilization changes and policies eliminating cost-sharing for claims related to COVID-19.

 

  • Members of both HDHPs and lower deductible plans experienced decreased cost-sharing in 2020, relative to previous years.

 

Previous Commercial Insurance Publication Materials

2021

2019

2018

2017

2016

2015