Affordability Crisis Concerns Grow
For the 2nd consecutive year, health insurance premiums across the country have continued to rise for both public and private sector plans, impacting retirees and employees alike. Following a near double digit increase in FY25, the state’s Group Insurance Commission (GIC) approved an overall average increase of 11.7% for FY26.
After being hit by a $10 per month increase for the 2025 Medicare Part B Premium, the GIC’s Medicare enrollees will now face an average increase of 7.3% across the three Medicare supplement and one Medicare Advantage plans offered by the GIC. Wellpoint’s highly popular Medicare Extension Plan faired slightly better than the average coming in with a 7.2% increase year-over-year.
MEDICARE BUY-IN HEIGHTENED IMPORTANCE WITH INCREASING PREMIUMS
The GIC’s eight non-Medicare plans carry the brunt of the premium increase, with an average of 12.7%. As the price difference between Medicare and non-Medicare plans continues to worsen, Mass Retirees has placed heightened importance on implementing a Medicare Buy-In program for the GIC’s roughly 10,000 non-Medicare eligible retirees.
“For a variety of reasons, Medicare plans tend to be less expensive and are better suited to meet the needs of retirees than are non-Medicare plans. The success municipal governments have had in implementing Medicare Buy-In and lower insurance costs proves that the program is a win-win for retirees and the government,” said Association CEO Shawn Duhamel. “The GIC knows that this program is a priority for our Association and continues to investigate implementation options. Like most things, implementing Medicare Buy-In for 10,000 retirees is easier said than done. However, with insurance costs sharply rising, a solution to move things forward is urgently needed.”
Driving the premium increases are rising provider costs, coupled with higher prices for prescription drugs. For instance, the price of GLP-1 and other specialty drugs continue to sharply rise year-over-year. Efforts by insurance providers to reign in rising provider costs have led to heated contract disputes with physician groups and hospitals.
The GIC is not alone in announcing higher insurance premiums in 2025. Rates at the municipal level have witnessed a similar increase, with some communities announcing Medicare plan increases exceeding 20%!
At the national level, increases across insurance plans for federal employees and retirees increased 11.2%. Neighboring states are also experiencing sharp average increases: ME 9%, RI 8-12%, and VT a staggering 18%!
Also taking effect on July 1, 2025, will be the new $10,000 Basic Life Insurance benefit for State Retirees and Active Employees. Passed at the behest of Mass Retirees within the FY25 State Budget, the new benefit level marks the first increase since 1985. Since life insurance benefits are a local option, increasing local Basic Life coverage is an issue now before municipal governments. Our Association continues to work closely with local retirees and municipal officials to pass local benefit increases.
HARD CHOICES, WITHOUT EASY SOLUTIONS
While the Association is not happy to see insurance premiums rise – especially by double digits – we do applaud the GIC for not choosing to cost shift or degrade the quality of benefits. In fact, FY26 will mark the 8th consecutive year without any widespread changes or increases in copayments or deductibles under the GIC.
There was a time when the GIC responded to rising healthcare costs by passing the costs onto retirees and employees by way of higher copayments and deductibles. The out-of-pocket (OOP) increases even happened in the middle of a plan year. This extreme act resulted in our Association and public sector unions coming together to pass legislation preventing mid-year changes in OOP costs.
Another key factor that differentiates the plans offered by the GIC from many private sector plans is the fact that the Commonwealth is self-insured for all plans, except the Tufts Medicare Advantage plan. This means that the Commonwealth assumes the risk and acts as the financial backstop if the cost of claims exceeds expectations in any given year. In turn, the GIC contracts with insurance carriers to administer the plans for which they are paid an administrative fee (which tend to run in the single digitals here in MA).
“To be clear, we never want to see insurance costs go up. But given the limited options available to control costs, the GIC must be applauded for doing the right thing and not choosing to cost shift,” explains Mass Retirees Legislative Liaison Nancy McGovern. “The fairest way to handle cost increases is to spread higher prices out through monthly premiums, with the Commonwealth picking up the lion’s share of the new costs. Remember, the state covers between 80-90% of the cost of premiums for state retirees – depending on the date of retirement. Municipal governments cover an average of 75% of the cost, with a minimum split of 50/50.”
HEALTHCARE AFFORDABILITY: A GROWING CONCERN
Last year, Blue Cross and Blue Shield of Massachusetts made headlines by conducting a survey of 1,000 Massachusetts citizens that showed that 1 in 4 respondents indicated that they had forgone medical care in the past year because they could not afford the out-of-pocket costs. This means that 25% of residents of our state cannot afford the copayment for a doctor’s visit or prescription drugs – never mind the cost of an annual deductible.
While alarming at the time, concerns around affordability have grown considerably following the spike in monthly premiums in 2025. Add in the ongoing pressure of higher- than-average inflation on day-today staples such as groceries, and we have the making of a true crisis of affordability.
Recent meetings of both the GIC and the state’s Health Policy Commission (HPC) have focused on this point. In addition to BCBS, insurance providers such as Wellpoint and Point32 have also shared their concerns that something must be done to slow the growth of healthcare costs.
“Costs are going to go up, but double digit or even high single digit increases are not sustainable. Retirees and employees cannot afford to pay these costs and there is a limit to just how much the government can absorb. When a growing number of people are choosing not to seek needed medical care because they cannot afford the cost, there is obviously a crisis,” comments Duhamel. “Mass Retirees has always prioritized the need to maintain high-quality and affordable healthcare for retirees and employees. But it does no good to have access to high-quality healthcare if you cannot afford to pay the bill. At the same time, these benefits are too important to have the quality diminish.
“This is the challenge that, so far, no one has been able to figure out. We’re now at the point where we need to come together and find solutions. While our Association does not have the answers, we vow to work together to help find a solution for our members.”
The GIC’s open enrollment period runs from April 2, 2025, through May 1, 2025. It is the annual opportunity to change insurance plans or enroll in the GIC’s retiree-pay-all dental plan.