Group Health Premiums Continued To Rise After Reform, But At Smaller Rate

Eighteen months following enactment of health care reform, the cost of group medical benefits continued to rise but those cost increases moderated, according to the November 2011 Employee Benefits Market Survey, conducted by The Council of Insurance Agents & Brokers (CIAB).

“Our latest survey indicated that premium increases have ebbed somewhat after initial shock and uncertainty following enactment of ACA in 2010,” said Ken A. Crerar, president and CEO of The CIAB. “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,” he added.

Although this survey revealed that all groups—small, medium and large—faced significant price hikes for group health care coverage during the last six months, small groups of 50 or fewer employees saw the largest hikes, with 39 percent receiving increases of 11 percent to 20 percent, compared with 62 percent reporting increases in that range in the CIAB’s May 2011 survey. Thirty-five percent of small groups received smaller increases ranging from 1 percent to 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.

In medium-size groups with 51 to 500 employees, 69 percent experienced hikes in the range of 6 percent to 15 percent, compared with 75 percent in the May survey. Sixteen percent experienced increases of 1 percent to 5 percent, no change, or decreases, compared to 8 percent in the May 2011 survey. 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 percent to 10 percent. Prices rose more than 10 percent for 9 percent of large accounts, compared to 21 percent which had increases of that magnitude in the May survey.

Comments from brokers on group medical plan pricing presented a nuanced picture consistent with adjustments underway to ACA, according to the survey. “As a whole, recent renewals have been lower than any other time I can remember,” said one broker. “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.

Other brokers saw prices rise due to the impact of ACA, 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).”

Still another development that emerged in this and previous surveys is that carriers and employers are offering fewer options since enactment of the ACA. “In the small to medium account range, we have noticed a tightening of the amount of plan options offered to groups,” one respondent wrote.

In the CIAB’s May 2011 survey, 100 percent of responding group benefit consultants expressed some level of concern about the impact of the ACA on their business, with 59 percent being “very concerned.” By this latest survey that concern had moderated to 97 percent of respondents expressing some level of concerns, with 51% “very concerned” and 46 percent “somewhat concerned.”