Health insurance costs rising more slowly

Health insurance premiums for next year are still rising, but the rate of increase may be starting to slow, according to experts in the insurance field.

And the effect of some new benefits under the new federal health care law , which added 1 to 2 percent to this year's rates, could be wearing off as insurers find out that new coverage and benefit mandates are not as costly as they had initially feared.

Health insurance companies who have filed their 2012 rates with the state are reporting between 0 and 9.9 percent increases, said Linda Sheppard, director of accident and health for the Kansas Insurance Commissioner's Office.

The 9.9 percent figure is kind of a "magic number" because under the Patient Protection and Affordable Care Act, companies that seek increases of 10 percent or more have to report that to the federal government. That then triggers a rate review by state or federal officials to ensure the increase is justified.

"Companies are trying to avoid going above that 10 percent threshold," Sheppard said.

But the overall increase at the state level doesn't tell you how much you or your employer might have to pay.

Buried within the statewide figures are a myriad of employer group plans, each with its own set of rates based largely on factors such as the historical cost of paying claims and the age and gender of the people who work there.

So, as automakers say, your mileage may vary. Customers in some plans will get higher-than-average increases, while others will get smaller-than average increases, or even a decrease.

IMA Financial, the largest brokerage/consulting firm operating in Wichita, has seen renewals among its 160 employer clients ranging from a 5 percent decrease to a 33 percent increase, a company official said.

Effects of new law

In its annual survey of health care costs released at the end of September, the Kaiser Family Foundation concluded that the average cost of employer-funded, family-plan health insurance this year is $15,073.

That's an increase of 9 percent from 2010, the report said.

This year's report was also the first to quantify the effects of the initial implementation of the Affordable Care Act, also referred to as Obamacare.

Much of the controversial law — including the mandate that people buy insurance or pay a tax penalty — is not due to be implemented until 2014.

But according to the Department of Health and Human Services, several key provisions are already in effect, including:

* Young adults are allowed to remain covered under parents' policies to age 26.

* Insurance companies can't charge co-payments or deductibles on many preventive health services, such as cholesterol and diabetes screening, mammograms and colonoscopies.

* Children cannot be denied coverage based on pre-existing medical conditions.

* Insurance companies can't revoke coverage from sick people because of technical errors on their insurance applications.

* Lifetime limits are eliminated on necessary services such as hospital stays.

The Kaiser Foundation found that the provisions of the Affordable Care Act added 1 to 2 percent to the cost of coverage this year, said foundation spokesman Craig Lee.

"Most of the increase in premiums is due to stuff other than health reform," he said.

The foundation report said that about 2.3 million young adults took advantage of the opportunity to stay insured under their parents' policies.

Lee said the foundation has not determined how many of those young adults would have gone uninsured otherwise.

'Slowly leveling off'

The initial effect of the health care law seems to be working its way through the system, according to Marcia Benshoof, president of IMA Employee Benefits Management Services.

In addition to Wichita, IMA has offices in Topeka, Kansas City, Dallas and Denver.

Benshoof said companywide, rate increases for next year are about 1 percent lower than originally projected.

About two-thirds of the increase is due to the rising cost of medical care. Most of the rest is because of increased usage of medical services by the people who are insured, she said.

But while health insurance rates are still rising, the trend seems to be slowly leveling off, she said.

"We're about 1 percent down in 2012 over the 2011 trend," she said.

Benshoof said she thinks that insurers may have overestimated the cost of implementing the first phase of the Affordable Care Act when they set the rates for this year.

At the time, there was uncertainty over what the costs would be because of the new mandatory benefits, she said.

But she said those costs did not turn out to be significant for most carriers.

Insurers are responding by adjusting rates to slightly lower increases "now that they don't see it as bad as it could have been," she said.

Another factor that can make a big difference in how much individual employees pay out of pocket for insurance is the split — how much of the cost your employer picks up and how much you pay in rates, deductibles and co-payments.

In the last few years, the trend has been for employers to have their employees pick up a larger share of their insurance coverage cost.

But Benshoof said it's too early to tell if that will continue through 2012.

"That's a big part of what goes on in November and December," she said.