Health Care

Health insurance rates continue upward trend

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Another year, another health insurance rate hike.

Kansas insurance brokers say they’re seeing rate changes that range from a decrease of 5 percent to hikes upward of 40 percent for large employers.

That comes from Mark Isley, area president of HUB International, an insurance brokerage, who said his Wichita office brokers health insurance for about 250 employers, most of which are in Kansas. About 120 of the total 250, are large employers, he said.

Dyan Thornton, vice president of employee benefits practice for IMA, a commercial insurance and employee benefits brokerage in Wichita, echoed the rates for next year, saying he’s seen anything from from 3 to 5 percent increases to 30 to 40 percent hikes.

But Sarah Sampson, an insurance broker for Fee Insurance Group, said she saw milder hikes for next year’s renewals. Hers ranged from 3 to 11 percent for about a dozen large employers she represents.

She said the increases can sometimes seem jarring, but should be put into context.

“We’re still really confused on what should be expensive and what should be cheap,” she said. “To me, it just fits the cost structure of how were living these days – we spend $5 on coffee and eat $12 burritos.

“You can’t expect your insurance to be less than what you spend on coffee.”

You can’t expect your insurance to be less than what you spend on coffee.

Sarah Sampson, broker for Fee Insurance Group

Most people receive their health insurance from large employers – companies that employ 50 people or more.

Rates vary from company to company with some receiving no increase, some seeing rates drop, and some receiving increases of more than 30 percent.

It’s difficult to get an all-encompassing view of rate changes for large companies because the employers negotiate rates directly with insurance companies and don’t publicly report them.

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Large employers generally have more leverage in rate negotiations than individuals and small businesses. Because of that, insurance companies submit individual and small business rates to the Kansas Insurance Department, which can approve, adjust or deny the rates.

For 2017, small businesses and individuals who buy insurance on their own will pay up to 50 percent higher than last year’s rates, which already saw sharp increases. But not everyone who buys individual plans will pay more because tax credits and federal subsidies absorb much of the increases.

An education trend

With higher premiums have come higher out-of-pocket costs.

Under the Affordable Care Act, companies can set out-of-pocket maximums at $6,550 for individuals and $13,700 for family plans. Out-of-pocket costs include deductibles, coinsurance and co-pays.

Many employers now offer plans with high out-of-pocket costs in an attempt to offer lower premiums.

In general, large employers are “a bit more in charge of their own destiny,” than small employers, Isley said. That’s because of rate predictability – leverage with insurance companies and the wealth of data available to large employers about their employees.

Educating their population is becoming more and more necessary, as employers realize their employees have a role in controlling their own costs.

Mark Isley, HUB International

Nonetheless, the group has been hit with rate hikes year after year that have pushed companies to become more concerned about the health of their employees, and thus the cost of that health.

Many brokers talked about a trend toward better employee health education.

“Educating their population is becoming more and more necessary, as the employers realize their employees have a role in controlling their own costs,” Isley said.

For instance, Thornton said, education about primary care and preventative treatment in hopes to prevent illnesses and diseases from worsening and becoming more expensive.

“That also makes your employee more productive,” Thornton said.

She also noted rising popularity of smartphone apps that allow consumers to compare treatment prices for expensive and less expensive options, based off individual health plans.

Rate hike causes

The Affordable Care Act began six years ago, and with it came ripples of changes, uncertainty and estimations.

Many insurance companies underestimated how sick and costly the individual buyers would be, which then led to sharp rate hikes for people who buy insurance on their own.

And prior to Obamacare, insurance companies could choose not to insure a person, or stick them with a higher premium if they had an expensive health condition. Now, insurance companies can only use a person’s age, location and tobacco use to set premiums for small business and individual plans. But insurers can consider conditions for large employers.

“We’re six years into it now, and the lack of competition is its own talking point, but with the lack of competition comes a better understanding of who you might insure,” Sampson said.

Gabriella Dunn: 316-268-6400, @gabriella_dunn