According to a survey of employers by the Health Research and Educational Trust, 2012 is showing a 4% growth in the cost of family health plans.
Before you jump for joy, don’t put too much stock in these numbers. The fact is when you survey employers for such a number, many have no idea what their numbers really are or do they put much effort into getting accurate numbers when completing a survey. Trust me, I completed and conducted similar surveys for decades. Often completion of the survey is pushed off on a lower level person to complete. If the number is accurate, of course that is good news, but the actual increase in costs cannot be known for several months after year-end.
On the other hand, keep in mind that even a 4% increase is more than twice the rate of general inflation. Perhaps there is a reality check in all this.
The Department of Health and Human Services is promoting all the money the Affordable Care Act is saving Americans by limiting premium increases and generating rebates if the administrative expenses of an insurer exceed predetermined limits (80% or 85% of claims) called the Medical Loss Ratio (MLR). However, if you look closely at the government figures, the reality of the situation seems a bit at odds with the promotional hype.
For example, reviewing health care.gov where you can find both requested premium increases by state and the medical loss ratios by both state and insurance company, the numbers are quite different from the above survey (recognizing that many employer plans may be self-funded and large groups).
As reported by the government for 2012, no requested increase was less than 10% for California and the majority is in the 14% range with the vast majority approved as reasonable.
In Florida no requested increase is less than 11% with an average of 14% or more.
Illinois shows no premium increase less than 11% with many in the 20% to 40% range and most were found to be “reasonable.”
New Jersey had no requested increase less than 14%. Also in New Jersey I could find only one small insurer where the Medical Loss Ratio (MLR) did not meet the government’s minimum. All major insurers exceed the 80%-85% requirement and no rebates were generated.
New York had no premium increase request less than 10% with an average about 20%. Many in the 13% range were deemed reasonable.
Take a look at the information for yourself, the fact is that there is a great deal of hype in all this, but it appears the majority of premium increases above 10% are justified based on the insurers claims experience and that when it comes to large insurers, most of their products have a medical loss ratio that meets or exceeds government standards.
Keep in mind that a premium increase to cover a future period of time reflects more than the growth in the anticipated cost of health care services such as the cost of an office visit. Premium increases must also consider the number and type of services received by the insured which is a reflection of the health care status of those enrolled. Premiums reflect the level of coverage provided, including benefits mandated by law.
- Employer-based health insurance costs rise again (newsobserver.com)
- Health Premium Growth Slows to 4.5%, Kaiser Says – Bloomberg (bloomberg.com)
- Checking Clinton’s facts on health care (politico.com)