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CIAB: Health Costs Squeeze Small Clients Harder

By Staff Writer

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Employers with 50 or fewer employees may be having an especially hard time controlling medical insurance costs this year.

Employers with more than 500 employees are having better luck this year at holding cost increases under 10%, but small employers are having even less success at holding down costs than they were in 2006, according to executives at the Council of Insurance Agents & Brokers, Washington.

The CIAB asked member brokers to tell it about average group renewal rates for their group benefits clients.

About 63% of the clients are seeing group medical rates fall, hold steady or increase by 10% or less, up from 54% in May 2006, CIAB executives report.

The percentage of midsize employers that have avoided increases over 10% has plateaued at 42%, while the percentage of small employers that have avoided increases over 10% has fallen to 17%, from 21%.

Meanwhile, over on the group life side, more than two-thirds of employers of all sizes are seeing premiums hold steady or fall, CIAB executives report.

So far, most employers are reluctant to try to control costs by switching to plans based entirely on combinations of high-deductible health coverage with health reimbursement arrangements or health savings accounts, CIAB executives report.

Many clients are increasing deductibles, but “the HSA plan designs have not provided enough savings to warrant making the change,” according to one CIAB member quoted in the CIAB benefits survey report.

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