Navigating the Shifting Healthcare Benefits Landscape in Massachusetts

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Navigating the Shifting Healthcare Benefits Landscape in Massachusetts

The healthcare benefits market in Massachusetts is undergoing significant change, and employers are feeling the impact. Rising pharmacy costs, insurer financial losses, and shifting state-level decisions are reshaping the way benefits are designed and delivered. While these developments bring challenges, they also create an opportunity for employers to take a proactive, strategic approach to their benefits strategy.

Financial Pressures on Insurers

Massachusetts’ healthcare system is under mounting financial pressure:

Insurers:

Hospitals and Providers:

  • Rising labor costs, staffing shortages, and shortfalls in government reimbursement are eroding margins.
  • Many are relying on investment income to stay afloat, contributing to closures, consolidation, and reduced patient access.
  • Mass General Brigham reported a $432 million operating loss in 2024, with an operating margin of -2.6%.
  • Beth Israel Lahey Health was able to cut operating losses to $25 million in Q1 2024 compared to a $66 million loss in Q1 2023 but has been operating at a loss in recent years.

The combined effect is hospital closures, consolidation, and reduced patient access to care, an unsustainable trajectory if left unchecked.

The Role of GLP-1 Medications

GLP-1 drugs like Wegovy and Zepbound, are redefining coverage debates. While effective for weight management, researchers have found they are not cost-effective for obesity treatment over a ten-year horizon. As a result, insurers have begun scaling back coverage for weight loss purposes while maintaining access for diabetes care. For Massachusetts employers, this means that coverage of these drugs may differ dramatically from one plan to another. In some cases, coverage is excluded entirely, or premiums rise to reflect their inclusion.

Regulatory Updates: One Big Beautiful Bill (OBBB)

Several key provisions in the federal OBBB legislation have been identified that will impact employer-sponsored plans:

  • Direct Primary Care (DPC) arrangements are now HSA-eligible if fees are under $150/month.
  • Telehealth Safe Harbor has been permanently extended for HDHPs with HSAs.
  • Coverage restrictions for non-citizens and Medicaid expansion populations may reduce access and increase employer burden.
  • Federal funding cuts could impact provider networks and premium competitiveness.

Employers should prepare for plan design changes and employee confusion as these provisions take effect.

State-Level Alignment

These challenges are not limited to private insurers. The Commonwealth itself is taking similar steps. Governor Maura Healey recently vetoed GLP-1 coverage for weight loss in the state budget, citing an estimated $27.5 million in savings for the Group Insurance Commission (GIC), which covers more than 400,000 public employees. Like private carriers, the GIC is contending with a multimillion-dollar deficit driven in part by GLP-1 spending.
This alignment between public and private sectors underscores a key point: GLP-1 coverage for weight loss is not becoming the standard in Massachusetts.

What This Means for Employers

Employers should be prepared for continued pressure on healthcare costs. Premium increases, plan design changes, and limitations on drug coverage are all possible in upcoming renewals. Employees, especially those who have heard about or are using GLP-1s, may be confused or frustrated by changes in their benefits.The challenge ahead is to strike a balance between affordability and access, particularly when it comes to managing chronic conditions that impact employee wellbeing and productivity.

How OneDigital Is Supporting Employers

At OneDigital, we are closely monitoring these trends to help employers make informed decisions:

  • Consultant education: Our teams are staying on top of the latest market shifts so we can provide clear guidance to clients.
  • Strategic plan design: We are helping employers explore creative strategies such as voluntary benefits, carve-outs, and cost-sharing models.
  • Financial modeling: We analyze the long-term impact of coverage decisions, so employers understand the trade-offs involved.
  • Employee communication: We support leaders in explaining benefit changes in a way that builds trust and minimizes frustration.

Looking Ahead

Pharmacy costs and insurer financials will likely remain volatile, with double-digit increases continuing to pressure the system. Legislative and regulatory changes may further shape the benefits landscape. Employers who stay proactive and seek strategic guidance will be best positioned to manage risk, protect budgets, and retain top talent in a competitive labor market.

If you’d like to learn more about strategies to help cut costs while protecting your employees and your bottom line, get in touch with a OneDigital consultant today.

Publish Date:Sep 18, 2025Categories:Employee Benefits