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Posted on Sun, Oct. 18, 2009

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Workers to pay bigger premiums

BY FRED MANN

The Wichita Eagle

As workers in Kansas try to figure out the benefit plans offered by their employers for next year during this enrollment period, one thing is obvious: The cost of getting sick is going up.

Workers' shares of premiums in Kansas are expected to rise 5 or 10 percent this year, said Kansas Insurance Commissioner Sandy Praeger.

At a time when the country is embroiled in a health care reform controversy, her office is trying to ratchet down requests for increases filed by insurance companies, she said, but it isn't easy.

"They're trying to hold the line because they're in the spotlight," Praeger said. "But I've looked at the filings, and they can justify the rate increases."

Employers that offer health insurance plans are continuing to shift more of the rising costs to their workers.

Nationally, premiums and other costs such as deductibles, co-payments and co-insurance are expected to jump 10 percent for 2010, according to worldwide human resources consulting firm Hewitt Associates.

The cost of coverage continues to outpace increases in wages and inflation, according to a report released by the Kaiser Family Foundation and the Health Research and Educational Trust. It shows the average annual premiums hitting $4,824 for an individual and $13,375 for a family this year.

The trend is a decade old. A report from the White House says health insurance premiums in Kansas have risen more than 2 1/2 times as much as wages since 1999. The cost of premiums is up 105 percent while wages have risen by 39 percent.

Companies have to raise premiums to cover a rise in claims, Praeger said.

"We're trying to keep them as low as possible, but a company that becomes insolvent doesn't do anybody any good," she said.

City of Wichita's plan

The city of Wichita, which is preparing benefit packets to hand out next week to its 3,153 employees, will offer plans that include a rise of about 5 percent in premiums, roughly half of the national average, said John Hale, manager of learning and development for the city.

Premiums rose about 4 percent the previous year, he said.

"Our plan has been stable, basically, for the last six years," he said.

Some of the credit goes to employees.

"Employees are starting to take responsibility for themselves," Hale said. "We have a pretty decent wellness plan that encourages folks to make healthy choices."

Luck also plays a part. Although the city has a $26 million health care plan, a few major illnesses can have a serious impact.

"A year where we have four or five major catastrophic events with an individual or family could put our insurance rates through the ceiling next year," Hale said.

Although the 5 percent increase is half the national average, it still is more than wages for city workers have risen.

Since January, employee wages have mostly been flat, growing at around 2 percent, according to the city's Finance Department.

State increase higher

State employees — including faculty and staff at regent universities such as Wichita State, which has about 1,700 benefit-eligible workers — face a larger increase in premiums.

The most popular of three state plans will see a hike of 7 to 7.5 percent in premiums, as well as higher deductibles and co-pays, said Peter Hancock, spokesman for Kansas Health Policy Authority in Topeka, which runs the health care system for state workers.

Until the state budget crunch hit last year, there had been only small increases in premiums.

The state funds its own plan, and it used to have more money in the fund than required to remain solvent. As health costs rose, the state spent about $60 million from the fund over a five-year period to hold down increases for workers.

But when the budget crunch struck last year, the Legislature turned off the spigot on payments into the fund for seven pay periods.

As a result, "the fund is no longer overfunded and we are looking at hefty increases for next few years," Hancock said.

Slight rise at bank

Employees at Intrust Bank, which renewed its plan in August, saw premiums rise only slightly, with no increase on some options, said Diane Iseman, vice president of corporate communications.

A single person's premium rose $2 per month and a family's rose $10, depending on the option they chose, she said.

Slight increases in health insurance equated to slight increases in salaries, she said.

The bank, which has ridden the rough financial seas without laying off any of its roughly 1,000 employees in Wichita, northeast Kansas and Oklahoma City, pays 70 percent of premiums; employees pay 30 percent. The bank has been able to sustain that 70/30 ratio when premiums go up, Iseman said.

Some containment

Although it's hard to tell what might come out of health overhaul efforts in Washington, D.C., cost containment will occur naturally through some of the provisions in some of the bills being negotiated in Congress, Praeger said.

Among them are provisions that would require all but the poorest families to buy health insurance or pay a penalty.

"Having younger and healthier folks in the pool is going to help,'' she said. "But long term there needs to be major changes in how health care providers provide services.

"I do think going forward we'll have some reform in place that will help spread costs over a larger percentage of the population. Absent that, we'll continue to see increasing costs."

Reach Fred Mann at 316-268-6310 or fmann@wichitaeagle.com.