June 21, 2001 - Several readers opined (along with
their responses) that they expected this week's survey to be
a "doozie" --and they were right. In terms of a final result,
there wasn't much suspense --a full 84% opposed any kind of
price caps/controls to help with California's energy crisis.
Most seemed to believe that (a) California had gotten itself
into this "mess", and now had to extricate itself or (b)
other states had similar energy crises at other times, with
no federal intervention. Of the 15% that supported at least
some level of support (and no, they weren't all from
California), most were concerned about the potential impact
on lower income families --and a concern that there were
energy firms taking advantage of the situation to unfairly
gouge prices. One percent -- was honest enough to admit that
they didn't know enough about the situation/consequences to
weigh in (although there was also: First let me state that I
do not have enough understanding of why there is a shortage
of power out west (I.e. production capacity vs. usage and the
history of energy companies there). But I never let facts get
in the way of a good opinion)
“Being on the West Coast and therefore impacted by
what happens in California, I feel the situation is a bit
more complicated than just guarding against price hikes
or spikes. Californians are just beginning to look at how
they can conserve energy. My husband travels down there
and has noted that landscape lighting is finally being
reduced and stores are beginning to cut back on usage.
But all of us have a ways to go. Higher prices will cause
us to look at how we are using energy. However, I think
the “free market” has some clogs in it and caps at some
level are necessary to protect against the robber barons.
“
“As a native and life-long resident, I’m disgusted by
the prevailing attitudes of those outside the state
towards California. The state represents the 5th largest
economy in the world; we sink, the nation sinks. I think
that the government should monitor the pricing vs. what
they paid for (or the cost of generating) the power. I
just don’t feel we should be over charged. “
“Even if you believe it is some sort of divine
justice for Californians to pay more for their energy,
since California is the largest producer in the United
States of produce and other goods used and enjoyed by all
Americans, guess who else will feel the pain of these
“just” uncapped rate hikes?However, I am concerned that because of past industry
regulation, we may not have “perfect competition” among
producers. Thus, if we allow prices to go where they
will, I would only ask that there be some kind of
oversight to make sure the markets are not being
manipulated by the producers. “
“The government should ensure that the California
economy doesn’t spiral into a recession. Too much tough
love will punish all of us. That having been said, those
(unkind word deleted) in Sacramento should be crucified
for the colossal screwup that was deregulation in
California and the gov’t should prevent price gouging not
higher prices.That being said they do need some help from the feds
as they cannot do it by themselves. Gee it seems like we
just did this with the land debacle a few years ago. A
final item, no way those company execs should be getting
bonuses. “
There were a number of readers in the (just) “been
there” camp, such as:
“I just returned from San Francisco on Sunday night.
Although I was out there–in SF and Napa Valley–for a
week, I saw little evidence of conservation. There were a
few TV ads, but nobody really talked about the need to
conserve. Billboards are still lit, hotels don’t tell
customers to turn out lights. They need a rate hike.
“
SURVEY SAYS: Readers Share Their Healthcare Cost
Experience
May 9, 2002 (PLANSPONSOR.com) - This week, we asked
readers what kind of healthcare premium increases you're
coping with - and what strategies you might be using to deal
with them.
Well, things seem to be even worse than we’ve read – a
whopping
52%
of our survey respondents say that they are having to deal
with healthcare premium increases of more than 15% (
‘way in excess of 15%’
, according to one reader). In fact, that number
would have been higher, but for creative approaches and
program changes by a number of respondents. Still, it
appears to be a losing battle for some. One reader
noted,
‘we’re coping with a weighted average of 32% for cal
year 2003, making this year’s modest 20% look quite
attractive.’
Over a third (
36%
) are dealing with 10-15% increases, while roughly
12%
have managed to keep the increases below the 10% level.
Even the medical profession is nonplussed, according to
some respondents.
‘…as folks in the industry, we are as perplexed as
anyone about what is happening, because the premium
increases certainly aren’t ending up in physicians’
pockets. Our sense is that with a rapidly growing
national problem with professional liability insurance, the
state of our health care delivery and financing system is
precarious, at best.,’
according to an orthopedic surgery practice.
A number of readers were good enough to share their
hard-fought experiences with us – many have changed
providers, upped deductibles, introduced tiered
programs. One noted
‘The short answer is we deal with healthcare premium
increases through education and pain sharing.’
A couple of readers suggested that workers themselves
might be part of the problem. One notes,
‘…what might get us a step closer is if we can convince
our employees that it is imperative that they take control
and responsibility for their health. They should go
for a physical each year. They should listen to what
their body is telling them. They should take their
meds to lead healthier life….’
Another noted, somewhat more directly,
‘The REAL issue is: how do you tell employees that they
are overweight and smoke and drink too much and that’s
really why our costs continue to increase!’
But perhaps, in view of the increases reported, it
should come as no surprise that this week’s Editor’s Choice
was a reader who simply said –
‘It is out of control.’
Thanks to everyone who participated in our
survey!
The question was: what kind of healthcare premium
increases are you coping with - and what strategies might
you be using to deal with them?
THE VERBATIMS
Our health insurance premiums went up 31.7% this year. At
least for this year, we've just increased employees'
contributions. Next year, given another "whopping" increase,
I suspect we will increase deductibles, copays, etc. Where
will it end??
We will be increasing co pays by employees.
The answer to my health care increases is (c).
Specifically it was 12.4%. Actually, my prescription
benefit only increased by 8%. This is a heavy push
towards generic drugs.
Regarding the plan in whole, I am self-insured. In
order to keep my costs down for the next year, I've increased
my stop loss by $10,000 per covered individual. Also,
I've increased individual and family deductibles by $50 each
and changed the co-pay structure on my prescription
card. Also hurting me are the skeletons I have in
my closet. I've had a three - four employees who've
exceeded the stop loss amount in previous years and their
illness are those that could recur. So, I am damned if
I cover them and a cold callous SOB if I don't.
This past year we saw 20-25% increases on just about all of
the HMO's offered at various locations as well as a 20%
increase in our self-insured plan expenses. We put in a
3-tier drug program (generics, preferred brands, and
non-preferred brands) to help contain prescription drug costs
and we have initiated such programs as spousal/dependent
carve out to push dependents to other employers' plans as
well as paying for opting out altogether.
Our company was utilizing an ASO contract that for 10+ years
was extremely good -- two bad years sent us shopping
(definitely the D category). Our employees were paying
$5.00/week for health/prescription/dental but we could no
longer absorb the increasing costs. We sent out a RFP
to 10 different companies-- HMO's, PPO's, POS's and standard
indemnity. We have approximately 185 employees coast-to-coast
and wanted one plan to fit all. We opted for a PPO for the
health and prescription, which is a higher cost but better
coverage. The dental is a self-funded program with
specified limits. Employees are paying 20% of the cost
that runs through a cafeteria plan. We also have flexible
spending accounts.
More importantly than what are we doing is what is our
philosophy and how will it be shaped the companies going
forward. Two years ago we tweaked the plans by shift
some costs and responsibility for care on to the employee. As
costs go it was minimal with deductibles going from $200 to
$250 and out of pockets moving from $1200 to $1250. The
direct cost with the employee
was moving from a 90% employer paid premium to an 80% which
as been staged
in. This year we will have the 80/20 split.
We are now taking another fresh eye at the subject and
like many others wonder how much we can shift or want to
shift on to our employees. For this year we are
bringing forward a strategy to reduce the number of insured
plans, we current offer and add a Defined Contribution for
those young employees who never see themselves a getting
sick. Our self-insured products are quite good and the
penetration for physician and hospitals are good as
well. So, do we really need to supplement with insured
products that cost are exploding in and cannot be controlled
by the company directly.
Probably not. However, what perception and actual
changes will the employee experience? They may feel
they are losing something that is very valued to them.
They do not like change as much as we press it upon
them. Some may lose their physicians or have to pay
more for out-of network services. All not a good start
to accepting change.
Is there a perfect world? No. We all know that
there is not one insurer or TPA who can deliver the whole
world and guarantee no disruption in services by network that
now want to flex their muscles. The employer is coming
into hard times regardless which direction they go.
What might get us a step closer is if we can convince our
employees that it is imperative that they take control and
responsibility for their health. They should go for a
physical each year. They should listen to what their
body is telling them. They should take their meds to
lead healthier life. Can
we bring that impact to the organization? Yes, I have
seen it. When an executive finds they have a very
serious condition, it becomes a top priority to education,
but you can't always count on someone at the top stepping up
to the plate.
This was certainly more than you wanted to know, but in
the coming years I see no win-win situation for the employer.
While we are self-insured, we had budgeted an 11% increase in
costs for 2002, and we seem to be running true to
budget. Currently, the Company pays 75% of the cost,
and the employees the remaining 25%, so if our costs go up
11%, theirs do too. For 1/1/02, we also increased our
co-pays for office visits and prescription drugs.
However, I am not alone in feeling a sense of dread about
1/1/03 HMO renewals. While we won't get those numbers
for a couple of months, a reliable harbinger is CalPERS, and
theirs came in at 25%!!!!! This scares most of us in
benefits, as they have huge leverage with their hundreds of
thousands of covered members, and they are usually able to
keep their increases several points lower than the rest of
us. What will the future hold, and how can companies
deal with it, while still offering a true value to
employees????
Many companies are looking at things that, at the end of
the day, just cost shift to employees, many of whom are not
able to pick up the increased cost, and therefore will
neglect care. In the long run, this strategy will
backfire, I think, as costs will explode, and there will be a
backlash against companies shifting cost to minimum wage
earner employees, who are still uneducated and
unsophisticated healthcare consumers. Some companies
are trying to get information out there to make employees
more educated, figuring they will then made better healthcare
choices and decisions. But while you can lead a horse
to water, you can't make him drink, and the same applies
here.
Bottom line: The steps, big and small, that
companies take to try to deal with these significant cost
increases, are only stop-gap measures, putting band-aids on a
huge problem, and there are leaks everywhere. It will take a
major change in the delivery of health care in this country
to effect the kind of control on costs we all need.
Unfortunately, with the political system that exists, and
with the raw memory of how poorly treated and ridiculed the
last brave souls were who tried to make a full-scale change
in healthcare delivery, we will all go through a lot of pain,
high costs, ranting and raving, before someone will have the
courage, and support, to go down that path again.
We offered the same insurance for 10 years, until the
provider was "acquired". During the acquisition,
service went down the tubes. We bounced around for 2
years, thought we had found a home, and then got hit with an
increase of (d) over 15%. We had to go elsewhere.
Our employees are perpetually confused about coverage.
I've had a headache for 4 years. I want to go back to a
kinder gentler health insurance time. (1992?) We
may have to consider upping the employee-pay percentage.
Our increase was 10-15%. The initial quote from our
insurance provider was significantly more than a 15%
increase. We were able to lower the increase by
changing (i.e. increasing) the employee contribution and
changing the co-pays for our prescriptions, office visits and
ER.
Our health plan costs are expected to jump over 15%.
Some strategies being used/considered include, 1) health risk
assessments with premium differentials for those that
participate, 2) considerable cost shifting, 3) defined
contribution models, 4) increases to prescription drug
copayment levels, 5) shrinking retiree benefit levels, 6)
reducing the overall number of employees eligible---possibly
take this benefit away from part-time employees.
Without any action we anticipated 16.5% for our
self-funded PPO plans and a range of 10% to 50% for the fully
insured plans (25% of total).
To solve the unacceptably high projections we changed the
Co-Insurance in the PPO's on the In-Network side from 100% to
90% and went to 70% from 80% out of network. Two other PPO's
were already 70% out of network.
In addition we moved the office visit co-pay to $15 from
$10 and RX brand drug co-pay to $15 from $10.
Notably, we did not raise employee contributions on top of
the changes above which would have even further increased the
out of pocket employee cost-sharing. Current employee
cost-share is about 20% of premium in payroll deduction
contributions.
Result was we project no more than 10% increase overall
for healthcare this year but the changes were drastic in a
company that does not hit the employee hard for these
programs.
Healthcare premium increases are in the 10-15% range.
The company is considering unbundling benefits, increasing
deductibles and co-pays, and charging a higher co-pay for
specialist services
Our health care plan increases are (b) 5-10% for the last
year. We have increased the co-pay for the office visit
to $15.00 and increased the prescription co-pay to $15.00
generic and $30.00 for name brand.
We are way past d) so far this year. In the past three
years we have tried more managed care, shifting more costs to
employees, disease management, educating employees about cost
drivers, etc, etc, etc. Because of our moderate
population size and dispersion throughout the country, it is
considered inefficient to try to implement a significant
(which means monetary incentives) wellness program throughout
our population...which is unfortunate, because I believe that
changing employees' medical care usage, eating and exercise
habits is the only way we will reduce the trend.
We are dealing with increases far in excess of 15%, and
unlike past years, are having to pass most of the increase on
to employees. We're trying to educate our workforce about the
costs of sponsoring a medical plan, and encouraging them to
take part in holding down claims costs. However, the
traditional HMO/PPO environment doesn't offer much incentive
to employees to control costs. Therefore, we are strongly
considering a Consumer Directed Health Plan for 2003.
Our increases have fallen in the 15% range for one company
with 17 employees. Our other company with 130 employees
has received 13% increases. We have had no choice but
to raise co-pay amounts for medical and prescription services
so we can lower our plan costs. We have an employee
whose spouse has muscular dystrophy (which is considered a
catastrophic illness). When we look at other carriers
at renewal time, we see lower (or same) rates from
competitive carriers.
However, once we disclose the catastrophic illness,
carriers can then increase their proposed rates up to 67%
(which is what we experience). While we are happy with
our current carrier, if that should change, our new rates
would be at least 67% more than we are paying now. So,
what insurance companies are really saying is that they only
want to cover healthy people. Almost sounds a little
discriminatory. I'm hoping we will start to see more
companies like Destiny Health who can offer a little
creativity in benefit design while managing to keep premium
costs down.
Our health care costs have risen in excess of 15% in the last
two years (last year was over 20%) and in the 5 - 10% range
each year in the 5 years prior to that. Years ago we
would switch carriers for a "better price" but soon found out
that the "better price" was bait for the switch only.
When it came time to renew, the increase was always so
substantial that you would have been just as well off to stay
where you were, and the employer and employees would not have
to deal with the myriad of problems involved in any switch.
We are a small software company with 23 employees and
truly feel "helpless" when it comes to our health care
insurance.
We have experienced increases the past two years of 20% and
25% in our health care premiums. We employ approximately 325
employs, and most are fulltime employs and eligible for
health care coverage.
This past year we negotiated with our provider to offer a
plan with greater co-pays, and greater employ cost sharing.
For the first time in many years, we offered our employees
two plan options:
1) The "premium" option required higher employee premium
contributions, but had lower "risks" in the amount of "out of
pocket" costs.
2) The "standard" option offered lower employee premium
contributions, but had greater "out of pocket" "risks".
70% of our employees preferred the "higher premium" option
and chose to avoid the potential "risks".
We held small group meeting explaining the benefits. These
were conducted by our CEO, HR, and myself (CFO). We felt the
message (although bad) would be better received by our
employees if it came from persons within the organization,
and not from Humana.
Funny you should ask this....I just signed the renewal form
on Monday. As a small business we were hit with an 11%
increase in health insurance premiums, which I was
repeatedly, reassured that this was a very, very good
deal. As an alternative we were offered options with
much less coverage for the same premium we were paying last
year or a variety of lesser plans with slightly reduced
premiums.
Since we have historically paid the entire premium for our
employees, we will continue to do so. However, we do
make it very clear to each and every employee what we are
paying so that they appreciate the value of heath
insurance. In addition, we really encourage employees
to seek medical care when warranted because our plan is very
generous.
It should be noted that as a corporate policy, we do not
have "sick days". Each employee has an allotment of
"personal leave" that can be used for any purpose including
vacation, childcare, illness, etc. We feel that this is
fair given our commitment to our employees' health care.
We're coping with a weighted average of 32% for cal year
2003, making this year's modest 20% look quite
attractive. In our "politics over business" strategy,
we continue to charge both our employees and retirees only
$25/mo for their monthly premium co-payments.
We received a 15% increase for our NY plan and a 46% increase
for our national plan. I managed to get the 15% down to 8%
with a change in plan design, but I'm running out of things
to change.
We changed carriers for the plan with the 46% increase but
still had to pay 18% over the existing premium. We ask very
little from our employees in terms of contribution to medical
- approximately 10% of premium.
At open enrollment this year we asked our broker to emphasize
the issues driving up healthcare costs such as demand for
'designer drugs' and doctor visits for trivial reasons. The
REAL issue is: how do you tell employees that they are
overweight and smoke and drink too much and that's really why
our costs continue to increase!
We are having over 15% increases. We are passing some
of the increase along to participants. My POS plan is
reducing the payments to doctors causing the doctors to get
out of the plan. So, we're coping by paying insurance
companies more for less service, may they rot in…
We're a self-funded plan with about 1000 participants.
After holding employee costs level for 4 years (and the
employer side picking up increases/deficits), we've raised
employee costs 42% at one fell swoop. We're also making
plan design changes to cost shift to plan users through
increased deductibles, co-pays and out-of-pocket maximums.
Our experience last year blew us out of the water with
more claimants going through the specific re-insurance point
($125,000) than ever - and our experience so far this year is
no better. Attributed to: higher medical costs,
larger number of claims, more aggressive treatment plans,
prescription drugs.
For 2002 our company raised our cost for health insurance
20%. Plus co-pays for virtually every health service
have gone up. My husband and I have small children and the
medical expenses, between co-pays and premiums is staggering.
We continue to have increases in the 12-13% range.
We're self-insured and having a relatively good year. I
guess it happens once in a while! Maybe we'll be able
to hold to a 12-13% again, but employees won't be especially
happy because when the price increases, they expect more
coverage, and, likely, will get less. No win win here!
We use HMO/POS plans at virtually all of our 25 U.S.
locations. Our health care costs would have increased about
15%+ on a nationwide basis in 2002. . We held the premium
costs flat (for both the 80% paid by the Company and the 20%
paid by the employee) by: 1) increasing PCP copays from $10
to $20, 2) increasing Specialist copays from $15 to $25, 3)
increasing in-patient hospital copays from $0 to $250, 4)
increasing outpatient hospital copays from $0 to $100, 5)
increasing ER copays from $35 to $50, 6) moving to a more
restrictive Rx formulary and a more restrictive pharmacy
network, 7) inducing the use of generic drugs - if Doctor
permits generic and member purchases brand, the member pays
the full difference, 7) increasing mail order copays for a 90
day supply from $20 generic / $50 brand / $80 non-formulary
to $25 / $60 / $100 (retail copays remained at $10 / $25 /
$40), 6) mandating mail order for maintenance drugs after
getting Rx filled 2x at retail.
Our health care costs have increased by 7% from last
year. Up until October 2001, the company was paying
100% of all employee premiums. Since then we have passed on
some of the cost to the employees, splitting it 50/50 with
deductions being made on a pre-tax basis. Some
employees dropped the plan but overall it has saved the
company money. I personally believe the company should
go 80/20 with the employee contributing the latter so that
employee satisfaction would increase a bit. What are
some other suggestions?
Our health and prescription drug claims are running over 15%
and we have been forced to respond with higher premiums and
high prescription co-pays.
Our health care premiums went up 50% this year. We had
to increase co-pays and deductibles to bring them down a
little. It is out of control.
10-15% for the PPO Plan, 25% -HMO Plan, higher
deductibles, higher copays for office visits and higher
copays for prescription drugs
Ours is more in the (b) 5 - 10% increase level for the
year. The strategy has been to start passing increases
on to the employees by increasing the part they pay.
This year a plan was established for annual increases on the
employee paid part of the premium. This plan is not
tied to the premium increases the company incurs. It
was decided that it is important for employees to become
accustomed to annual increases (this as opposed to the
idyllic world we go home to each day where every desire is
delivered free, and in pairs to our front door with the
twitch of a nose).
Costs for coverage are increasing but we manage to keep
the larger part of our work force at pay levels a little
under the industry average. It's tough to keep good
people on staff long enough to keep things going with under
average pay and this really won't help. As far as
health coverage many employees seem to request that
everything be covered which is not realistic either. Is
it common for employers to offer a basic plan fully company
paid and then a "plus" package that is picked up totally by
employees who see the need?
Last year our healthcare premium increase was (c)
10-15%. However, we just had our mid-year review and
this year looks to be (d) over 15%.
Last year we modified our plan a little to keep the
increase a bit smaller. We split off our dental (now
non-parallel), increased the copays for prescriptions (3-tier
program), and other small changes. We also had to pass
part of the increase on to the employees.
d. over 15%
Self insuring for most losses with stop gap loss limits
for big losses
Our health care premiums rose about 23% (after an initial
renewal proposal of more than 30%) and we chose to increase
deductibles and co-pays as well as the employee contributions
to the cost. Our employees pay on a sliding scale
according to their incomes, with the highest paid shouldering
almost the entire cost. We value our insurance program
and are willing to pay for the coverage and so we have not
heard too many complaints about sharing the cost.
Employee contributions are made on a pre-tax basis and we
also sponsor flexible spending accounts, which help ease the
burden.
Our healthcare costs are definitely growing faster than the
costs of our other benefits. In the mid-90s our costs
decreased when we went from self-insured to fully insured
with an HMO. Then in the late 90s to now our costs have
been increasing more than 15% per year. We do have an
excellent insurance broker who has a good handle on the
healthcare/insurance picture for our area, so we know that
our costs are not out-of-line compared to costs for this
region. We do charge our employees 30% of the cost, and
we have been raising the co-pays to keep the premiums down.
Healthcare premiums: over 15%, AGAIN. Options: a
gradual increase in cost-sharing, we think we're under
market; self-insured analysis; prescription carve-outs; more
audits --active employees (for ex: proof of dependency),
insurance and TPA records, etc. Benefits costs are also
considered more when making business decisions -- office
moves, etc. Benefits staffs have as close to "job security"
as possible in this era!
Health Care Costs are increasing from 12-15% on average, just
about what one would expect with the government (in this case
many layers starting with the Feds but also heavily supported
by the State) polls making rules for the industry,
legislating benefits and mandatory coverage, legislatively
defining and expanding costly experimental treatments as
routine practice whether they make sense or not, increased
drug mandates and otherwise making the service industry less
efficient. Don't forget the packs of legal hyenas
roaming the corridors under the domes of government.
There is no free lunch except in Sacramento and Washington
for legislators feeding at the trough showered by perks from
special interest groups.
HealthNet is an option in our healthcare benefits choices
(outsourced to TriNet). The premiums increased 40% year
over year. I guess CalPERS has been able to hold their
HealthNet increase at 25%! These numbers seem
outrageously high!
Regarding healthcare premium increases, we have two plans
renewing on July 1, 2002. The increases are 3% and 3.5%. Our
dental plan is separate and we will see a 25% increase in
rates. Currently, we pass on a portion of any increases to
employees in higher premiums (Company pays 80%, employees pay
20% of premium cost). We continue to shop around each year to
see if lower rates are available with other carriers. In
addition, we are seeking more detailed information on
employee healthcare usage. Our intent is to address areas of
high usage with communications and wellness programs that
would change risky behavior such as smoking, obesity, etc.
Our employee coverage increased 11%, dependent coverage went
up 16%. As has been our policy forever, the firm pays
the employee, the employee pays the dependent.
Unfortunately, our dependent coverage is so expensive only
the senior partners can afford it. I keep business
cards in my drawer to give new employees who want dependent
coverage. The business cards are from a lady who sells
individual policies cheaper than our group coverage. As
one of my employees so aptly put it: "With the money I
save getting individual policies on my family, I can buy a
new car." This is sad but true. Thank God my
family is all working and covered by their own
employers.
Our increases averaged 10-15% for 2002. We had one HMO
renew at a wonderful 6%, and another renew at a terrible (to
us) 18.7%. Our average for 7 HMOs was 11.8%. All
7 of our HMOs are regional, so not everyone is offered an HMO
option.
Our self-funded PPO is expected to reduce by 4.2% because
of plan design changes implemented, particularly increases in
prescription drug copays and increased premium cost
sharing. Some of the HMOs also experienced plan design
changes, some mandated by the HMO, others adopted by us in
order to buy down the renewal increase.
Right now our PPO is running more efficiently from a cost
standpoint than all but one of our HMOs, so I expect we will
take a hard look at our more costly HMOs for 2003 and either
adopt plan design changes or drop that HMO option for the
coming year.
Our healthcare premium increases will be in excess of
15%....... way in excess of 15%. Our business is part
of a large corporation and the costs for healthcare. My
strategy is to convince others that we need to put some basic
cost saving measures in place (which has never been addressed
previously). Such as increased co-payments
for medical and drug (ours are $10), increase employee
monthly costs (ours are extremely minimal), increase out of
pocket and deductibles etc.
The issue certainly strikes at our little outfit, a 10-doctor
orthopedic surgery practice with 25 FTE employees. In
Washington State, consolidation among the payers has resulted
in only three or four major players, resulting in significant
downward pressure on reimbursement rates. At the same
time, our professional liability premiums are up over 50%
from last year.
As a small group of fewer than 50 lives, very few payers
even want to bid on our medical insurance coverage and for
the last couple years, the only affordable solution has been
to go through an employer association. At our plan
renewal on May 1, our premium increased by only 4.8%, but we
had to accept a 50% increase in our deductible, from $200 to
$300, a 100% in the out-of-pocket maximum from $1500 to $3000
and a $20 co-pay on visits. The carrier wouldn't even
bid on our previous coverage. So as folks in the
industry, we are as perplexed as anyone about what is
happening, because the premium increases certainly aren't
ending up in physicians' pockets. Our sense is that
with a rapidly growing national problem with professional
liability insurance, the state of our health care delivery
and financing system is precarious, at best.
My company is pretty small with only 30 employees.
We've seen a 15-20% increase in premiums every year for the
past 4 years. For our renewal coming up this summer,
I've been told to expect a whopping 40% increase. Since the
company picks up a large portion of the premiums, this is
going to be a strain on cash flow. I'm also afraid
we'll see employees drop their family coverage because of the
increase in their contributions. To cope with the
rising premiums, we'll probably switch to a plan design that
includes higher user costs like higher co-pays and
deductibles.
The short answer is we deal with healthcare premium increases
through education and pain sharing.
Education: We educate employees on the cost of our
plans and what drives the healthcare premium increases in
general throughout the year and at the annual health
insurance option review meeting (Increased prescription
use and prices, aging population, malpractice lawsuits &
insurance, etc.).
Pain sharing: We make changes in the plans every
year even if they are minor changes to reduce premium
increases (this year we increased office visit co-pays from
$10 to $15). We pay 50% of dependent coverage premiums
that means employees pay the other 50% that increases as
premiums increase. We have also provided financial
incentives to use less costly providers - that is the
employee pays the difference for the more expensive plan if
that is what they choose.
This strategy has been effective so far.
I am the controller for a continuum of care long-term health
care facility and have seen the increase on both ends of the
spectrum. Not only did our employee healthcare benefits
increase 10%, but our liability, general professional,
property and auto expense increased over 39%. One
strategy we used last year to reduce our liability insurance
cost was to bring facilities across the country, similar to
ours with a good non-claim history, together to form an
off-shore captive. It has greatly reduced our insurance
expense and we are now part owner in a new line of business.