Massachusetts businesses relax for another year, rate setting waiver extended

In an effort to keep small business health insurance premiums low, the Commonwealth of Massachusetts has applied for and received an HHS waiver allowing it to use state small group rating factors. These factors, used to determine how rates should be set, are not aligned with the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), but continued use is likely to preserve the current status of the market and avoid disruption.

Previous waivers

Massachusetts had received a waiver in 2013 allowing it to implement a slower transition to ACA compliance. This waiver, extended various times, covered state rating factors, allowing small group insurers to use two-thirds of the state factors established in July 2013 through January 1, 2017 (see Massachusetts granted extension on ACA requirement deadline, Health Reform WK-EDGE, April 30, 2014). The state rating factors would be further reduced to one-third until December 31, 2017, and then completely phased out. The waiver extension will allow one-third of the rating factors to be used through the end of 2018.

Rating factors

The rating factors in question apply to businesses with no more than 50 employees. An employer group, Associated Industries of Massachusetts, stated that insurance costs for some small businesses could have increased by as much as 50 percent without the temporary waiver, and expressed hopes that a permanent waiver would come. Massachusetts allows a company’s size and industry to be considered, but the ACA does not take these factors into account.