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Four Tips for Minimizing Growth in Health-Care Plan Premiums

Last month the Kaiser Family Foundation released the results of its annual Employer Health Benefits Survey and reported that annual premiums for employer-sponsored health coverage rose modestly in 2012. For family coverage, the premium increase averaged four percent this year, and three percent for worker-only coverage.

The survey is a joint project of the Foundation and the Health Research & Educational Trust and included 3,326 public and private firms of all sizes.

We asked Pauline Sobelman, Lockton consultant and vice president, who manages numerous client accounts for Lockton in our Northeast region, for her reaction to the Kaiser study findings.

Push-back on rate increases

“We are seeing several developments in the marketplace that probably are contributing to this slower growth in premium increases,” she says. “For instance, in the Northeast region, some states—and New York would be one example—are pushing back when insurance carriers seek rate increases.

“In addition, there has been an uptick in the number of employers offering higher-deductible plan options, which typically carry lower premiums, and the number of employees who are choosing these types of plans.”

Sobelman also points to some evidence that utilization rates for health care are moderating.  “We don’t have any hard data yet on why this is happening,” she says. “It may be related to the ‘high-deductible’ trend, or indicating that efforts to help health-care consumers make better purchasing decisions are starting to take hold.”

Tips to minimize premium increases

Sobelman has four tips for employers who want to minimize increases in health-care-plan premiums:

  1. Make sure you get the “right” price. Not every carrier or broker has the access to the specialized underwriting expertise to accurately analyze your workforce and identify your level of risk. Make sure you are getting expert counsel on this.
  2. Make sure employees have some “skin in the game.” Design your plan so it includes meaningful co-pay and co-insurance requirements (coupled with reasonable maximums on out-of-pocket expenses). “A plan with a $10 co-pay for doctor office visits does not motivate employees to make choices about using that service,” Sobelman says.
  3. Pay attention to “eligibility” management. Consider maintaining coverage for your employees, but adopting surcharges or “opt-out” options for spouses or other dependents. And audit your plan regularly to make sure the covered population does not include ineligible individuals. “It’s not unusual for an audit to reveal that 5 percent or more of the people in an employer plan are not actually eligible,” says Sobelman.
  4. Take a long-term view. “At Lockton, we encourage our clients to adopt a strategic health-risk management program that includes building a healthier workforce by changing employee behavior,” says Sobelman. “We help clients analyze the biggest issues for their workface and prioritize efforts that will methodically reduce their level of risk over time.”

For more information on how Lockton can help your organization minimize the growth in healthcare plan premiums, please contact me at rruotolo@lockton.com.

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