588% more for health insurance? It's true, survey finds

Rate hikes are in the double and triple digits, Morgan Stanley says. Yet, savvy agents have found a solution to client woes.

Programs

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Producers have been charged with selling some of the priciest individual and small group health plans in recent years, a new survey from financial service firm Morgan Stanley reveals. For some, the attached price tag is as much as 588%.

Based on information collected from 148 brokers, premiums around the country increased an average 11% for group plans and 12% for individual policies. And in some parts of the country, the rate increases are even higher.

Premiums for individual plans in Delaware increased a whopping 100%, followed by New Hampshire at 90% and Indiana at 54%. In the small group market, Washington state held the dubious honor with rates increasing 588%. Pennsylvania small groups faced a 66% increase and in California, employers can expect to pay premiums 37% higher than last year.

Morgan Stanley said that while the rate hikes are “largely due to changes under the [Affordable Care Act]” like the minimum essential benefit requirement or increased insurer taxes, there are other factors at work.

Age restrictions on premiums, for example, prevent carriers from charging older customers a higher premium. That means younger, healthier clients are paying disproportionately.

Another factor may be commercial underwriting restrictions, which inflate insurer costs and are passed on to policyholders through premium increases.

Whatever is causing the high rate increases, producers are struggling to break the bad news to clients. Ingrid Martin, an account executive with Ohio-based CBIZ, said that her agency’s push to help clients budget for a rate increase of 15% was confounded when rate increases came in closer to 30%.

 “Our smaller group markets, with between 50 and 60 employees, are seeing 30% increases right out of the gate,” she said. “I had one very small group in Florida that just saw a 44% increase. Obviously we moved the plan, but [the increases] are all in the high double-digits. It’s just crazy.”

Martin said she is managing to contain some of the cost by exploring self-funding options with her clients.

“Right off the top, that takes away some of those premium fees,” she said. “They’re now looking at these level premium plans to try to offset not only the fees, but also to better handle their claims. Our actuarial teams can help with that, thankfully.”

Wellness programs specifically designed to target where claims are coming in is another way to add value to clients, Martin said.

And as a last resort?

“I think most brokers are looking at minimum value plans to make sure employees have access to acceptable plans,” she said. “If some move to that, it reduces the cost for those that are young and healthy.”

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