Transforming Health: Employer-sponsored insurance trends

Written by Matt Paul, Reporter/Producer | Aug 1, 2013 4:00 AM

(Harrisburg) -- As health insurance premiums rise for the 67 percent of Pennsylvanians who are getting health insurance through their jobs, employers are looking for ways to contain costs.

The average employer-based family premium in Pennsylvania surpassed the $15,000 mark in 2011, and most businesses now require their employees to share in those costs -- meaning the average worker is paying close to $4,000 in annual health insurance premiums.

But, behind the round numbers is volatility from workplace to workplace.

Matt Pfeiffenberger is a vice president at Murray Securus, a Lancaster-based risk management firm. He says rate hikes for employers renewing their benefits in July were all over the map. “We saw the whole gamut,” Pfeiffenberger explains.

“We saw clients who got very favorable increases, some in the single digits, five or eight percent. We saw some get increases of 15 to 20 percent. We also saw clients getting 30-plus and 40-plus increases over last year's renewal.”

Much of the inconsistency, he says, is related to a company's demographics and experience.

“If you have a company -- let's say a roofing company -- where there are 40 employees, but 36 of them are 27 year old single guys, generally their rate's going to be pretty favorable. Because generally 27 year old guys aren't using their health care on a regular basis.”

Pfeiffenberger says the basic trend has been a 10 to 12 percent annual increase in health insurance premiums across the midstate.

So, one of the ways employers are trying to keep up with the rising costs is through benefit changes, like higher deductibles.

Conrad Siegel Actuaries in Harrisburg has been surveying Central PA companies about employee benefits since 2001, and partner Rob Glus says deductibles have changed drastically in the past few years.

“The percentage of companies that are offering higher deductible health plans -- whether they are technically offering high deductible health plans or not depends on your definition -- but deductibles of over $1,000, which I think that's how most people would at least intuitively think of high deductible, went from 6 percent in 2006 to 36 percent by 2012,” Glus explains.

The numbers that appear in the survey are consistent with national averages, and Glus expects to see an even greater shift toward so-called consumer-driven health plans in the future.

“Consumer-driven designs, very simply, are higher deductible plans,” he says. “Plans that put more responsibility on the employees to make decisions, and generally use some sort of account-based system to have the employees take some responsibility for, 'Do I want to save money?' 'Do I have an incentive to be healthier?'"

The health savings accounts Glus references allow workers to use pre-tax dollars to help pay for medical care until their plan's deductible has been met.

With just 11 percent of midstate employers offering this sort of coverage, Glus says the region is lagging behind national trends. But, he says he believes consumer-driven designs are the future and the area is going to catch up eventually.

When it comes to the Affordable Care Act, large employers aren't expected to see major changes until the requirement to either offer employees insurance or pay a penalty takes effect in 2015. Even then, neither Glus nor Murray's Matt Pfeiffenberger expects many midstate companies to drop coverage.

However, smaller companies should notice changes, under the ACA, when new rating restrictions kick-in next year. No longer will insurance companies be able to factor things like gender and health conditions into their small group rates. It has Pfeiffenberger concerned for companies with up to 50 employees.

“Hopefully, we won't see some of the spikes that we're anticipating and hopefully they'll be relegated to just a few companies,” he says. “But we are concerned that changes in the demographics -- changes in the underwriting criteria -- that are coming out of the act with good intention are actually having this unintended consequence of insurance carries having to up the ante for some of these smaller groups.”

Until the health care law fully kicks in two years from now, employers large and small are still sharing health care expenses with employees and still searching for ways to keep those costs under control.


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