We can expect the other shoe to drop regarding premium increases for health insurance policies as a result of ObamaCare later this year. In two recent articles by The Wall Street Journal (“Health Insurers Seek Hefty Rate Boosts” and “More Health-Care Insurers Seek Big Premium Increases”) published within the last ten days, we see premium increases projected for New Mexico at 51.6 %; for Maryland at 30.4%; for Tennessee at 36.3%; for Illinois at 29%; and for Pennsylvania at 30%. Bob Laszewski at Health Policy and Strategy Associates LLC notes, “We have a trend of the big market share companies asking for 15% to 35%.”
While these increases are associated with Affordable Care Act plans, you may rest assured that the small group market (200 employees or less) will see the same type of shockwave premium increases for 2016 as a result of the new community rating rules, ObamaCare taxes and a host of other changes that have taken place in the small group market. Expect a knee jerk reaction from employers seeking to flee the fully insured small group marketplace to look for alternatives and rate relief offered by partially self-funded, captive and level premium plans.
What employers, brokers and agents must keep in mind is that plans offered by these alternative models are underwritten and are not guaranteed issue. Expect underwriting guidelines for partially self-funded, captive and level premium plans to become tighter and more restrictive as more employers seek access.
Smart employers won’t get caught in the lemmings-to-the-sea phenomena that will begin occurring in about September of this year and will start exploring their options now to move to these models that can reduce costs by as much as 30 percent while providing benefits equal to the fully insured plans.
Gone are the days of switching carriers to lower premium and the lazy broker/agent sending over a spreadsheet asking the employer to pick his/her poison. Employers can still offer good benefits at a reasonable cost, but it takes work and planning on behalf of the broker, agent and employer to make this happen.
America’s Healthcare Advocate