Group health insurance costs continue to rise despite the new healthcare reform law, but have started to moderate “after the initial shock and uncertainty,” according to the latest employee benefits market survey by the Council of Insurance Agents and Brokers.
Council members remained apprehensive about the impact of health care reform, although the November survey indicated some moderation in the intensity of concern, the survey found.
The survey said that 18 months after passage of the Patient Protection and Affordable Care Act (PPACA), group medical benefits costs rose once again. The latest survey was conducted this month.
The survey found that the greatest benefit from the new law were the largest accounts, of groups with more than 500 employees.
Smaller accounts were faced with the largest rate hikes, the survey found. Some medium-sized groups did have rate decreases, although most had rate increases, the Council survey said.
At the same time, the market has begun to adjust to initial new requirements in health care reform, but some uncertainty may persist as additional aspects are phased in over the next several years, said CIAB president and CEO Ken Crerar.
Comments from brokers on group medical plan pricing presented a nuanced picture consistent with adjustments underway to PPACA.
“As a whole, recent renewals have been lower than any other time I can remember,” one broker told Council officials.
“The trend is lower, renewals more reasonable,” commented another. “We have seen more competitive new business rates coupled with lower renewals,” a third broker added.
Crerar said that other brokers saw prices rise due to the impact of PPACA, but noted that increases were tempered by continued interest in and movement toward consumer-driven health plans and wellness plans.
These plans typically have higher deductibles. “Interest in high deductible (plans) is taking off,” said one broker.
Deductibles and co-insurance continue to rise to keep the rates down,” another broker commented. Still another noted “carriers, especially trusts, seem to be more willing to come off of the original renewal position.
“(There is) continued interest in high deductible plans, HSAs (health savings accounts).”
Others still see significant price increases. In terms of pricing, “all the normal stuff, up, up up,” a respondent wrote.
“(Renewals) adding 2-3 percent for PPACA,” another broker commented.
Still another development that emerged in this and previous surveys, is that carriers and employers are offering fewer options since enactment. “In the small to medium account range, we have noticed a tightening of the amount of plan options offered to groups,” one respondent wrote.
The latest survey demonstrated that all groups – small, medium and large – faced significant price hikes for group health care coverage during the past six months.
The survey said small groups of 50 or fewer employees saw the largest hikes, with 39 percent receiving increases of 11-20 percent, compared with 62 percent reporting increases in that range in The Council’s May 2011 survey.
More than one-third (35 percent) of small groups received smaller increases ranging from 1-10 percent, compared to 13 percent in the earlier survey. Ten percent of small groups received no changes or price decreases compared to 3 percent in the earlier study.
The survey said that in medium-size groups with 51-500 employees, 69 percent experienced hikes in the range of 6-15 percent, compared with 75 percent in the May survey.
Sixteen percent experienced increases of 1-5 percent, no change, or decreases, compared to 8 percent in the May 2011 survey, Crerar said.
Large accounts of greater than 500 employees also saw some moderation in pricing. Fourteen percent experienced no change or price decreases compared to 5 percent in the May survey. For the majority (61 percent) of large accounts, prices rose in the range of 1-10 percent. Prices rose more than 10 percent for one in 10 (9 percent) large accounts, compared to 21 percent which had increases of that magnitude in the May survey.