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Health insurance rates to increase 4.2 percent next year

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Health insurance rates will rise an average of 4.2 percent next year for individuals and small businesses buying coverage in Massachusetts, state officials said Thursday.

The price increase is relatively modest compared with the beginning of 2018, when rates climbed an average of 16.8 percent after the White House followed through on a threat to pull federal payments that subsidize insurance coverage. Insurers raised their rates higher than usual in 2018 to make up for the loss in federal payments.

The 2019 rates, released by the state Division of Insurance, go into effect Jan. 1. They apply to one slice of the insurance market: 402,489 people who get coverage through small employers or buy coverage individually on the state’s insurance exchange, the Massachusetts Health Connector.

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Some people will see their premium costs go down, while others will see increases ranging from about 2 percent to 13 percent, depending on their plans.

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Jon B. Hurst, president of the Retailers of Massachusetts, said the increases will be difficult for small businesses to afford. “They are far too high given what big business and big government ... are currently paying,” he said.

Massachusetts officials have set a statewide target for containing the growth in total health care spending at 3.1 percent a year. The increase in insurance rates will again exceed that goal, Hurst noted.

Last year, insurance markets were in turmoil after President Trump halted federal payments that he slammed as “bailouts” for insurance companies. These payments, known as cost-sharing reductions, were a key element of the Affordable Care Act signed under Barack Obama and were designed to make coverage more affordable for lower-income Americans.

The payments to insurers in Massachusetts were expected to total $146 million this year. Without that infusion of money, insurers said they were forced to raise their rates substantially. Officials at the state Health Connector scrambled to help individuals shop around for new plans and avoid sticker-shock.

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Connector officials are scheduled to detail their 2019 coverage options in September.

Priyanka Dayal McCluskey can be reached at priyanka.mccluskey@globe.com. Follow her on Twitter @priyanka_dayal.