BOSTON – November 13, 2018 – The Baker-Polito Administration today announced it has secured from the U.S. Department of Human Services the flexibility to extend another year the existing use of small group rating factors to hold down premium increases and maintain stability in the market for small employers.
The rating factors are permitted under state law, but are not aligned with requirements under federal law. Through a series of requests to the federal government, the Commonwealth has been able to maintain those state rating factors in order to avoid market disruption and maintain premium consistency for small employers.
“We thank our federal partners for authorizing the continued use of state rating factors to provide stability and stabilize premium costs for small businesses in Massachusetts,” said Governor Charlie Baker. “With this important flexibility in place, we can continue to provide predictability to the market and continue to make health insurance more affordable to companies and their employees.”
Massachusetts received a waiver in 2013 to allow a gradual transition to full compliance with the Affordable Care Act, and the waiver recognized the success of Massachusetts’ state health reform law passed in 2006 in expanding coverage. Massachusetts has the highest insured rate in the nation, with 97.5 percent of residents covered, an achievement supported by the latitude to continue some state insurance practices, such as rating factors permitted under state law. These state rating factors offer insurers greater flexibility to price insurance plans according to the traditional practices of the Massachusetts market, preventing disruption in pricing.
The original waiver, as extended in later years, allowed small group insurers to continue to use two-thirds of the state rating factors in effect in July 2013 through January 1, 2017, after which rating factors would be reduced to one-third until December 31, 2017 and phased out entirely on January 1, 2018.
Under this agreement, brokered by officials from the Executive Office of Health and Human Services, the Executive Office of Administration and Finance, the Health Insurance Connector Authority, and the Division of Insurance, Massachusetts small group insurers can continue to use one-third of the original magnitude of the state rating factors in effect in July 2013 through December 31, 2019.