Group medical benefits renewal rates continued to increase in the U.S. market between June and October, but brokers say clients are not planning to cut coverage altogether, according to the November Employee Benefits Market Survey by The Council of Insurance Agents & Brokers.
"Members still saw premium increases for their clients, which is frustrating for them," said Ken A. Crerar, council president. "There is no question that the services of brokers have been in high demand since the passage of health care reform, and many are concerned about the lack of flexibility among carriers. There is a lot of confusion due to the slow or prolonged implementation schedule."
According to the survey, small, medium and large employers continued to experience group medical coverage rate increases and have started shifting some costs to employees through higher deductibles and co-pays and increased employee shares of premium costs.
Some employers also limited out-of-network options in an attempt to control the cost of group medical plans.
The survey indicated that 96 percent of employee benefits consultants are "concerned" or "very concerned" that health care reform will negatively impact their group benefits revenue.
"PPACA-required changes have increased cost to employers," one broker told the council. "Some are maintaining grandfathered plans and passing along higher contributions to the employees. Others are not, and are making necessary changes to deductibles, out of pocket maximums, and contributions."
Another said that "these initial changes are minimal but most clients anticipate much bigger changes in 2014, depending on what the law looks like then."
"Most of our clients are looking at maintaining costs, not trimming or increasing," said one broker. "(Cutting their program altogether) has been a discussion topic but not one that any of our clients are considering at this time." Another said, "Everyone is in a wait-and-see mode... waiting to see more guidance and what happens with the new Congress."
Of the benefits consultants responding, all indicated slight increases from the spring. Eighty-nine percent said prices increased for small accounts, those with 50 or fewer employees, with more than half the increases falling in the 11-20 percent range. For medium accounts - those with 51 to 500 employees - 95 percent said those accounts experienced increases, with 60 percent seeing increases in the range of 11-20 percent.
Group health premium hikes also were reported among large accounts - those with 501 or more employees. Sixty-one percent saw increases in the 6 percent to15 percent range, with 31 percent in the 6 percent to 10 percent range and 30 percent in the 11 percent to 15 percent range.
High increases were reported, particularly for medium accounts (51 to 500 employees) across all regions. Increases of 11 percent to 15 percent were reported for 38 percent of medium accounts in the Northeast; 41 percent of medium accounts in the Southeast; 71 percent of medium accounts in the Midwest; 79 percent of medium accounts in the Pacific Northwest; and 50 percent of medium accounts in the Southwest.
Most benefits consultants reported little or no change in group life insurance renewal rates. For 11 percent of small accounts (50 or fewer employees), rates were down 1 to 5 percent, but 50 percent of accounts had no change. For medium accounts (51 to 500 employees), 20 percent were down 1 percent to 5 percent, and another 40 percent reported no change. For large accounts (501 or more employees), 19 percent were down 6 percent to 10 percent and 35 percent reported no change.
"Ancillary carriers have been offering multiple year competitive rates to ward off medical carriers that are offering ancillary products," said one broker. "There is a much more aggressive marketplace and we are seeing very competitive quotes."
Meanwhile, health plans for more than 200 businesses and organizations won't have to abide by the federal annual limit requirement under health reform. The number of waivers has surged over the past few months since restaurant giant McDonald's reportedly warned lawmakers it would consider reducing health benefits for thousands of low-wage workers who are enrolled in limited medical plans and do not qualify for major medical coverage, or raise out-of-pocket costs because these plans did not meet federal requirements.
According to the Department of Health and Human Services, the number of approved applications for a waiver of the annual limits requirements has now hit 222.
According to the New York Times on Dec. 1, Sen. John D. Rockefeller, D-W. Va., slammed these mini-med plans, saying they give a false impression that someone would be covered for a financial catastrophe. "It's worse than nothing because of the false expectations and the false hope," Mr. Rockefeller said.
The Times reports the Obama administration contends coverage by these plans is better than nothing at all, and that "more comprehensive plans would be available through state exchanges in 2014, when all plans will have to comply with the law."