Oct. 18--Many people who get their health insurance through companies with more than 100 full-time employees can expect rate increases of about 15 to 20 percent next year.
Rates vary from company to company with some receiving no increase, some seeing rates drop, and some receiving increases of more than 30 percent.
Some employees may also pay more for out-of-pocket expenses in the form of higher deductibles, copays and coinsurance.
It's difficult to get an all-encompassing view of rate changes for large companies because the employers work directly with insurance companies to set rates and don't report them to the state Insurance Department. Nonetheless, some insurance brokers who work with large employers in Kansas offered a glance at what people can expect for insurance rates next year. The outlook is preliminary because some rates are still being negotiated.
Differences between large, small and individual
Sharp premium increases rippled through the health insurance market for small businesses and individual plans in Kansas earlier this year. The state approved rate hikes as high as 25 percent for those groups.
Much of the reason small and individual plans went up for 2016 came from Affordable Care Act restrictions.
Under the Affordable Care Act, insurance companies could only use a person's age, location and tobacco use to set premiums. That's a big change from how individual and small business insurance worked before Obamacare.
Previously, insurance companies could choose not to insure a person, or stick them with a higher premium if they had an expensive health condition.
Insurance companies said they didn't expect individual buyers to be as sick and costly as they were, which drove the increases for individual plans.
But for large employers, insurance companies can consider employee health conditions to set insurance rates.
Sarah Sampson, an insurance broker for Fee Insurance Group, offered this workplace example: "If three come down with breast cancer and one needs a bone marrow transplant: horrible renewal," she said.
Insurance companies had claims experience for large businesses, so overall the premium increases weren't as high as small group and individual plans, brokers said.
Employer efforts to save costs
Darrell Phillips, president of DPI Benefits, brokers health insurance for hospitals. He said he received 2016 renewals for five of his Kansas clients thus far. One received no rate increase and the rest received increases between 15 and 21 percent.
"That's frankly what I expect to see on the rest of our groups as they renew," he said.
Karen Vines, a broker for IMA Benefits, said many of her increases are around the 10 percent range. And Sampson, of Fee Insurance Group, said she saw an across-the-board range, but saw a number of rates increases around 20 percent.
Phillips, of DPI Benefits, said he's seen a trend of companies within an industry band together in what's called a captive arrangement. In captive arrangements, the companies self-insure employees for front-end expenses and then purchase plans from insurance companies for catastrophic losses.
Self-insurance means the employer insures the employees, rather than hiring an insurance company.
The captive arrangements are a way for the employers to cut back on costs. Phillips said the arrangements were generally used for property and casualty coverage, but have gained popularity for health insurance coverage.
Phillips said he also saw a trend toward higher out-of-pocket maximums such as deductibles, coinsurance and copays. Under the Affordable Care Act, companies can set out-of-pocket maximums at $6,600 for individuals and $13,200 for family plans.
"I am seeing a definite trend of increasing those to the max limit," he said.
Some employers are shifting more of the increase in premiums to employees.
State employees, for example, will fork out 35.6 percent more toward premiums. Meanwhile, the state of Kansas will pay just 1.3 percent more from what it currently pays toward its portion of the insurance.
Sampson, of Fee Insurance Group, said a few companies have explored the option of not offering insurance to their employees and instead paying the federal fine. That would leave the company's employees to buy insurance from HealthCare.gov or directly from an insurance provider. But it's rare for companies to follow through with abandoning coverage, Sampson said.
Mary Beth Chambers, manager of corporate communications for BlueCross BlueShield of Kansas, said some employers have shown interest in dropping health care for the spouse of employees as a way to save money.
The Affordable Care Act requires companies to provide insurance for its employees and their children, so a company can be compliant with the Affordable Care Act and drop spouse coverage.
Rates for large employers have crept up over the years. An increase in chronic disease diagnoses and unhealthy lifestyles are the main culprits for a gradual rise in large group premiums, brokers say.
But Chambers also said drug prices drove higher health care costs in Kansas this year, which echoes national drug-price trends.
"That will continue to put pressure on premiums across the board," Chambers said.
Reach Gabriella Dunn at 316-268-6400 or gdunn@wichitaeagle.com. Follow her on Twitter: @gabriella_dunn.
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