Many Spokane-area businesses are seeing their health-plan costs rise this year by at least the same double-digit percentage rate as last year and in some cases are being hit with even larger hikes.
Representatives of several of the Inland Northwests largest health plans say their rates are climbing an average of 15 percent to 20 percent this year, although some employers here will see increases outside that range depending on their experience ratings and other factors.
An assumed typical mid-range increase of around 17 percent here would be a couple of percentage points higher than the average nationwide increases projected in three separate reports released late last year.
Spokane benefits consultant Mark Newbold, of Corkery & Jones Benefits Inc., which brokers plans for about 500 Inland Northwest employer-employee groups, says hes seeing average rate increases mostly a bit higher than that, in the range of 18 percent to 25 percent. He adds that he has noticed no signs of a slowdown any time soon in the double-digit pace at which health-plan costs are rising.
Were telling our clients thats probably going to continue for the next couple of years. Of course, that can change if things change in the political landscape, he says.
Along with oft-cited cost drivers such as escalating prescription drug prices, expensive new technologies, and consumers rising use of health-care services, Newbold cites the aging of many employee groups as an aggravating factor. As the poor economy forces employers to lay off workersmostly younger, less experienced employeesthe average age within many employee groups has risen. Older employees tend to have greater health-care needs and expenses, Newbold says.
Thats had an impact on a lot of the groups here, particularly over the last year, he says.
Employees paying more
Despite the sharp climb of health-plan rates over the last couple of years, Newbold says he still isnt seeing many businesses drop their health plans.
In the majority of situations, employers are trying to hold to the same plan design, but are asking employees to pay more for it, he says. In other situations, were hearing employers say, Find me something less expensive.
In regard to the latter pleas, he says, the Washington Association of Health Underwriters is working with a group called the Employers Health Care Coalition to promote a bill before the Legislature that would allow small employers to offer a stripped-down health plan to their employees.
We definitely need small-group health insurance reform, he contends, noting that Washington state currently requires private insurers to include a large number of mandated coverages in the health plans. Those mandates, he adds, drive up the premiums.
Without any viable small-group health plan, thats forced a lot of small employers to not even offer coverage, Newbold says.
Regardless of the various efforts to contain costs, he says, We have to move forward as a society and realize that no matter what happens with premiums, there will be a higher percentage of your personal income that will be devoted to health-care costs. Thats due partly to the simple fact that people are living longer, he says.
Newbold expects to see employers increasingly contribute more to health-care benefits, in lieu of wage increases, which can have tax benefits for the employee.
This is going to be a learning-curve process. Its not about wage increases anymore; its about benefits, he asserts.
The annual National Survey of Employer-Sponsored Health Plans, conducted late last year for New York-based benefits consultant William M. Mercer Inc., found that the small number of employers providing health coverage free to workers got even smaller in 2002. It also found that the percentage of employers with 10 to 49 employees offering a health plan fell, to 62 percent in 2002 from 66 percent in 2000.
The survey showed that the average total health-benefit cost per employee rose 14.7 percent in 2002 among employers with 10 or more employees, to $5,646 annually from $4,924, and it projected a slightly smaller average increase of 14 percent for this year.
Two other consulting companies, though, forecasted that health-benefit costs would climb at a higher rate this year than last year. In one of the surveys, Hewitt Associates, a Lincolnshire, Ill.-based global outsourcing and consulting firm, projected a 15.4 percent average health-care cost increase for this year, compared with what it said was a 13.7 percent increase last year. Similarly, the Towers Perrin 2003 Health Care Cost Survey found that the cost of large employers health-benefit plans would climb 15 percent on average this yearthe highest projected jump since that big Stamford, Ct.-based management-consulting firm began conducting its survey 14 years ago.
Some of the premium changes being implemented here by health-plan providers took effect at the beginning of the year, while others will be felt later, as insured groups reach their annual renewal dates.
A look at the increases
Heres a quick look at the health-plan rate hikes being implemented by the largest providers serving the Spokane-area market:
Premera Blue Cross, which has about 270,000 members in Eastern Washington, says its typical percentage increases this year are in the mid to upper teens, which are on par with last years jumps.
However, Scott Forslund, Seattle-based spokesman for Premera, says the company has introduced a new line of products that let employers customize their benefits and networks, and enable employees to make more informed choices about the cost and quality of care.
He claims that Spokane-area employees who select the new modular-design products, which are being marketed under the name Premera Dimensions, should be able to make a meaningful dent in their overall cost of health care, compared with Premeras other health-plan options. The company began offering the new line to businesses with more than 50 employees this month and expects to make them available to smaller businesses by mid year.
Group Health Cooperative, which has about 84,000 members in Eastern Washington and North Idaho, is boosting its rates, on average, by percentages in the mid teens for small employers and higher teens for large employers, says Greg Swint, Group Healths Seattle-based vice president for marketing and sales. That compares with average premium increases last year of 7 percent to 8 percent for small employers and 12 percent for larger businesses.
Of the likelihood of additional double-digit increases over the foreseeable future, Swint says, I dont think anybody would say they see the clouds lifting at all.
Nevertheless, Group Health said last fall that it had begun making some fundamental changes in how it manages costs in an effort to become more affordable, while also making customer-focused investments that improve care and service. It eliminated about 175 jobs, took steps to expand its product offerings to include more flexible designs, and began re-evaluating whether it should continue investing in aging facilities or new services and technologies, such as electronic patient records and Web-based drug refills.
Asuris Northwest Health, which has about 30,000 members in Eastern Washington and formerly operated here as Regence Northwest Health, says its health-plan rates are rising an average of about 15 percent to 18 percent for large employers and 18 percent to 20 percent for small employers.
Jodi Coffey, a Seattle-based spokeswoman for Asuris, says the large-business rate hikes are similar to last years increases, but the small-business increases are higher. Last year they were under 10 percent on average for that group, she says.
Overall, she adds, Asuris rate increases are pretty much in line with whats going on everywhere else. People are using more services and the costs of those services are going up.
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