Commercial Insurance: Premiums and Member Cost-Sharing

Key Annual Report
Commercial Insurance Premiums Finding

Fully Insured Health Care Premiums in Massachusetts - graphic by Market Sector

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Key Annual Report
Member Cost-Sharing Finding

Health Care Member Cost-Sharing by Market Sector 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 and 2021 were developed without full knowledge of the impact 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 2023)

  • Between 2019 and 2021, private commercial member cost-sharing declined at an annualized rate of 0.7%, as 2021 totals remained slightly below 2019.


  • Between 2019 and 2021, premiums increased at a faster rate than both wages and salaries and regional inflation.


  • From 2019 to 2021, cost-sharing for members with high deductible health plans increased at an annualized rate of 0.2%, while cost-sharing for members with lower deductibles decreased by 5.7%.


  • From 2019 to 2021, claims paid by payers and self-insured employers had an annualized increase of 5.8%, while member cost-sharing experienced a 0.7% annualized decline


  • Between 2019 and 2021, fully-insured premiums increased by an annualized rate of 4.4% to $563 PMPM.


  • All payers reported annualized increases in average premiums from 2019 to 2021.


  • Eighty-eight percent of ConnectorCare members were covered by THPP and BMCHP, the two payers that offered the lowest average premiums in 2021.


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