The Benefit Basics 
 October 2009
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In This Issue
2010 Health Insurance Cost Predictions
Health Care Reform Starting to Take Shape
2009 Health Benefits Survey
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2010 Health Insurance Cost Predictions
 

The predictions for health care trends are now being released for 2010 and the outlook continues to be grim. These trends are forecasts for projected changes in health plans' per capita claims cost, as determined by insurance carriers, major insurance carriers (MCOs) and third-party administrators (TPAs).

 

The following factors can affect a trend: inflation, cost-shifting, fixed deductibles and copayments, utilization increases, use of more expensive treatment options, government-mandated benefits and technology changes. As a general rule, there is usually a high correlation between trend rates and actual cost increases as determined by carriers. Despite this, changes for plan sponsors may not be as similar compared to projected trends because of the uniqueness of the company.

 

PricewaterhouseCoopers (PwC) reported that costs will rise in part because many are worried about losing their jobs, and because of this, are using their health care more frequently while they still have it. Not only are workers seeking medical care that they might have otherwise put off, but PwC also reports an increase in stress-related illness.

 

According to the Segal Group, Inc., medical plan projections for the majority of managed care plans are similar to those found in 2009 - ranging from 10.2 to 10.8 percent. Quite the opposite, high-deductible health plans (HDHPs) are projected to increase by just over one percentage point to 11.9 percent in 2010.

 

Segal also reported that medical plan cost trends this year will be more than four times greater than the annual increase in average hourly earnings. With obvious pressure on plan sponsors, most are not waiting for federal health care reform and are accelerating their efforts to control health costs on their own. Attempting to curtail this increase, many plans have eliminated or greatly reduced coverage for brand-name drug classes while reducing copayments for primary care visits and increasing copayments for visits to specialists. An increasing number of plan sponsors are also monitoring wellness and disease management programs through incentive-based initiatives.

Health Care Reform Starting to Take Shape

 
As the health care debate carries on, what will be included in the final bill is still unclear; however, the following is likely to be included:
 
  • Every American would be required to have basic health insurance. Those without insurance from an employer or government entity such as Medicare, Medicaid or the Veterans Affairs Department would be required to buy it or pay a fine.  Subsidies would help lower-income families and individuals pay for insurance.
  • Insurance companies would be prevented from denying coverage for preexisting conditions and capping patients' out-of-pocket costs for care.
  • Nothing in the plan will require employees or employers to change coverage or the doctors they have.
  • There is a disincentive for employers in dropping health care insurance - penalties (tax on payrolls) for employers who don't offer health insurance, with small businesses exempt.
  • Those who are uninsured would be able to purchase insurance on their own from a new exchange, a marketplace for companies offering policies. Individual insurance rates are expected to drop.
  • It is unclear whether a public option will be one of the health care plans offered on the new insurance exchange alongside private insurance companies' plans. A national or regional cooperative with the same objective of increasing competition is also being proposed.
  • Medicaid  would be expanded to include low-income childless adults.
  • Medicare and coverage from the Veteran's Administration will not change; however, some benefits may be trimmed from Medicare Advantage.
  • The cost over 10 years is estimated at $900 billion to $1 trillion.
2009 Health Benefits Survey
 
The Kaiser/HRET 2009 Health Benefits Survey was recently released. This annual survey of employers provides a detailed look at trends in employer-sponsored health coverage, including premiums, employee contributions, cost-sharing provisions, and other relevant information. The survey continued to document the prevalence of high-deductible health plans associated with a savings option and included new questions on health risk assessments. The 2009 survey included 3,188 randomly selected public and private firms with three or more employees (2,054 of which responded to the full survey and 1,134 of which responded to an additional question about offering coverage).
 
According to the survey, premiums for employer-sponsored health insurance rose to $13,375 annually for family coverage this year - with employees on average paying $3,515 and employers paying $9,860. Family premiums rose about 5 percent this year compared to general inflation which fell 0.7 percent during the same period.
 
Researchers at the Kaiser Family Foundation, the National Opinion Research Center at the University of Chicago, and Health Research & Educational Trust designed and analyzed the survey.
Questions or Comments?
 
Do you have a question or topic you would like addressed in our next issue?
Please email Emily Frizzi at [email protected] or call (513) 745-0707.
 
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