Health Care

You'll feel a little pinch

One local employer is budgeting for a health benefits plan increase of 30 percent for 2011 — and another is celebrating a 0 percent increase.

It's been that kind of a year, as businesses deal with health care spending that shows no sign of slowing, coupled with changes mandated by the national health care overhaul.

A year ago, employers were facing average increases of 8 to 12 percent.

Several employers whose new benefit year begins Jan. 1 say they still haven't seen final health insurance numbers.

Bill Tracy, CEO of United Healthcare of Kansas, said increases are averaging 12 to 14 percent for 2011.

Gary Hardman of Hardman Benefit Plans said his clients are seeing increases of 0 to 20 percent, with averages of 8.5 to 10.5 percent.

A national survey by United Benefit Advisors earlier this year put the most recent increases, based on renewals through early June, at 8 percent.

Hewitt Associates, a human resources consulting and outsourcing company, predicts an 8.8 percent increase. It attributes that figure to increasing numbers of catastrophic claims and to an aging work force with higher medical expenses and costly medical conditions.

Kyle Orndorff, director of human resources at IMA, is celebrating a 0 percent change, the first he can remember. He credits it to a health risk management and wellness program put into place four years ago.

"At the end of the day, it is all about claims," he said.

Effect of new law

And about the health care overhaul, to a degree.

Insurers aren't breaking out how much of the 2011 increase is for the legislation's mandates and how much is for other costs.

"We're guesstimating it's between 3 and 3 1/2 percent for the required changes," Hardman said.

Hewitt Associates put it at 1 to 2 percent.

Mary Beth Chambers of Blue Cross and Blue Shield of Kansas said changes attributable to health care mandates vary from business to business and plan to plan.

Plans that had little coverage for preventive services will have larger increases, for example, because the "free preventive services" mandated in the legislation aren't free.

The patient no longer has a co-pay, Chambers said, but "that's going to be recouped in premiums. That's going to be reflected in premium costs."

The bulk of any increase, though, will be because of the number of services offered in a plan and the cost of those services, she said.

United Healthcare's Tracy said hospital costs, followed by physician and pharmacy costs, are the biggest components in determining rates.

BBB health plan

Mac Carter, president and CEO of the Better Business Bureau, hasn't seen numbers for 2011 yet but plugged in an increase of 30 percent as he prepared his budget.

"That may be way too high," he said. "It may just be 5 percent. I wish I knew."

Better Business Bureau members can get the same insurance for their employees. About 10 percent of them do, Carter said.

"Our plans are designed for companies that have 25 or fewer employees," and one-person businesses can qualify as part of the group, he said.

Johnson's Garden Centers switched to insurance offered through the bureau a few years ago, said Nancy Johnson, one of the owners. She said Johnson's has picked up quite a bit of the cost of insurance for employees in previous years but may have to shift some of those costs if the increase is as large as what Carter foresees.

Carter said the Better Business Bureau switched to a high-deductible plan two years ago because its HMO plan had become "prohibitively expensive."

Cost-shifting and plan redesign continue to be means by which employers are trying to control their health insurance costs.

Dana Carr of the International Pizza Hut Franchise Holders Association said the group still is working on renewals and hoping for the best.

It also is looking at having a grandfathered plan, an option allowed under the health care overhaul. That option lets a health plan escape some federal mandates but puts other requirements into place.

IMA's results

Orndorff said IMA put its health risk management and wellness program into place to try to control health costs.

At first, "we actually saw our health costs spike a little" as people who weren't in good health began to seek medical care. That was expected, he said, but in the next year, the increase slowed, and "we've seen significant trend in the bend the last two years."

He said IMA is saving about $63 per member per month from what costs would have been. "That's about $600,000 annually that we believe we're saving."

IMA is figuring out how to take its plan to the next level.

"We want people to be healthy. But it is about saving money, for them and the organization," he said.