It’s the claims stupid (and in this case a very liberal plan design)!
This employer gets it, very low deductibles are not good, but more important, they don’t blame an insurance company because they see what’s happening with claims. Interesting reading. Unfortunately, the answer is as it always is, the employee and retiree paying more are the source of the savings. Why did claims soar by 126%?
Crow Wing County authorized a number of health care plan changes in response to a 22 percent, or $800,000, increase in insurance rates for 2014.
“A 22 percent increase is just not sustainable for our organization,” said Tami Laska, human resources director.
Claims are driving the renewal increases, Laska said. The county’s health insurance benefit costs for employees and retirees is more than $5.8 million annually.
“In 2012, we exceeded our expected claims by 126 percent that means we overspent what we paid in by $845,000,” Laska said. “So we had a very high claims year.”
The next step was to look for options to reduce the premiums. Laska said they started by looking at the county’s most expensive plan — a $200 deductible for singles and a $400 deductible for families. But, she said, raising the deductible to $500 for a single and $1,000 for a family barely moved the needle. The cost changed by $66 per month, or 3 percent. Laska said they were looking at too large of a number to reduce to nibble at it. Even larger deductibles of $1,000 and $2,000 didn’t make enough of an impact. So she took the problem back to the benefits committee to come up with ways to erase an $800,000 cost increase for 2014.