By Katie Kerwin McCrimmon
Employers who provide health insurance to their workers are seeing an 8 percent price increase for 2015, but a stunning 92 percent of large employers surveyed in Colorado plan to keep offering coverage.
Conservative pundits long have predicted that health reform would spur employers to drop health insurance benefits en masse. But among employers with 50 or more workers, that doesn’t appear to be the case, said Bill Lindsay, president of the Lockton Benefit Group in Denver, the group that has conducted the annual Colorado Benefits Survey for 14 years.
As the economy improves and good workers are in demand, Lindsay said most large employers continue to view health insurance as an essential perk. Some small businesses, which are common in Colorado, may be choosing to change insurance carriers or use Colorado’s health exchange, but the Lockton survey focuses primarily on employers with 50 or more workers.
On the exchange this year, average prices remained relatively flat compared to last year. Lindsay said the study among employers more accurately reflects what’s happening to health insurance pricing overall.
“The rates inside the (exchange) are not representative of the entire market,” Lindsay said.
An expert on health care policy and costs, Lindsay now is chairing Colorado’s new Commission on Affordable Health Care. He said the 8 percent price hike for 2015 is relatively low compared to the double-digit annual increases that were standard from 2004 to 2011. But, Lindsay warned that if employers continue to see similar annual increases, overall costs will double in nine years.
And, it’s clear that employers who feel squeezed by higher health insurance prices are passing more costs along to employees.
Lindsay says it’s perplexing that Colorado continues to see health insurance cost hikes that are higher than the national average when the state is home to a relatively young, healthy population.
“It doesn’t make sense,” said Lindsay. “You ask doctors or hospitals, ‘Are you charging 8 percent more?’ And they say, ‘No. We can’t. The insurance companies won’t let us.’ ”
Lindsay said the only conclusion he can draw is that Coloradans are visiting doctors more often than people in other states, and are getting more tests and procedures.
“More services are being used,” Lindsay said. “All of these health care (entities) have MRIs and CAT scans. We’re using more of those services, probably because they’re available.”
A shortage of primary care providers who can see people at convenient times also prompts some people to go to the ER.
“That’s the most expensive place to have any care rendered,” Lindsay said. “If it’s not truly an emergency, you’re over-utilizing the services in the system and that drives the cost up.”
Among other key findings from the survey:
- At 8 percent, the 2015 renewal rate increases are down from a 10.8 percent hike for 2014.
- Employers are reducing benefits and offering more high deductible plans to bring down the cost increase to about 5.3 percent for 2015, down from 6.4 percent in 2014.
- 79 percent of employers expect to pass along more costs to employees, down from 86 percent in 2014, and a sign that the economy is recovering, Lindsay said.
- Cost of coverage is the top concern for employers. Many are also concerned about the impact of health care reform, but most say they have only limited knowledge of the Affordable Care Act.
- Wellness programs are waning in popularity slightly. About 42 percent of employers either are offering or evaluating wellness programs for their employees for 2015, down from 47 percent in 2014.
As employers grapple with the perennial problem of health care costs, Lindsay said more and more are choosing to have those who use more health care pay a bigger share rather than increasing costs for everyone.
“If rates are going up 8 percent, employers have two choices. They can have employees pay a greater percentage of premiums. If I do that, everybody’s costs go up. The alternate (choice) is to reduce benefits and have higher deductibles. That way, those who are using (benefits) are paying more out of pocket,” Lindsay said.
Health insurance has long masked costs, and policy experts say if customers have to pay more and “have more skin in the game,” they might make better health care choices.
But if people have to pay too much for care, they will sometimes delay seeing a doctor until they get really sick and the care ends up costing more.
“That’s the big debate,” said Lindsay.
The study findings show, however, that employers are offering many more high-deductible plans for 2015.
Of those that Lockton surveyed, 57 percent report that their plan deductible is $1,000 or higher. That’s up from 47 percent in 2014. A national study found that 41 percent of workers were in medical plans with annual deductibles of $1,000 or more this year, up slightly from 38 percent in 2013.
“This is another indication of how rising medical costs are affecting Colorado employers and employees,” the Lockton study found.