Broker Check


Medical Insurance Market Update

Lauren C. Stuart, QPA

Executive Vice President 


We are now well into the 4th quarter of 2018, and those of us in the insurance world are busily working with clients to review their options for 2019.  This article is a brief review of some of the trends and changes that may be helpful to you.

Global Perspective

Healthcare spending in the United States is projected at 18% of GDP once the 2017 numbers are finalized.  This represents over $3 trillion dollars.  There are some predictions that healthcare spending will cross the 20% of GDP mark in 2025.1  With private businesses providing the bulk of healthcare coverage for individuals, managing this rising cost continues to be a struggle.

We are often asked about what other employers face in terms of medical insurance premiums and cost sharing with employees.  The Department of Labor publishes statistics that can be broken down by industry, region of the country and employer size.  This data is available on the Bureau of Labor Statistics website.  In addition, the 2018 Kaiser Family Foundation Employer Health Benefits Survey was released on October 3, 2018 and shared the following results:

  •                 Average Annual Single Premium - $6,896 - Employers pay on average 83% of this cost. 
  •                 Average Annual Family Premium - $19,616 - Employers pay on average 72% of this cost.

It is important to note that this is a national survey gathering responses from employers of all sizes.  Employers in the northeastern portion of the country typically pay higher premiums.  As you might expect with costs continuing to rise, 85% of workers now have some type of deductible associated with their health plan.  Another shift we are beginning to see is more employers considering some type of self-insurance.  Thirteen percent of employers with fewer than 200 employees are taking this step. 

More information on how employers can take more financial control of their insurance is discussed later in this article.

Legislative Perspective

Healthcare continues to be part of the national conversation.  With the passage of the tax bill at the end of 2017, the individual tax penalty for individuals that do not purchase medical insurance will be reduced to $0 for the 2019 tax year.  Reducing the tax penalty to $0 effectively removes the ‘teeth’ from this section of healthcare reform legislation.  It remains to be seen if individuals will drop coverage in 2019 based on this change.  Changes to Health Savings Accounts (HSA) have passed in the House that would make these accounts more attractive to individual savers.  It is currently unclear if any of these bills will be brought to the floor of the Senate for a vote before year’s end.

Regional Carrier Perspective

For employers that want to begin to take more financial control of their medical benefits, there a variety of options to consider.  Taking the time to learn more about the pros and cons of partial self-insurance should be on the agenda for every business. Partially self-insured plans provide more data transparency, the ability to ‘shop’ fixed expenses, and only pay for the care used by their employees.  While some options are available to employers with as few as five enrolled employees, the options are limited until an employer has 25 or more enrolled in the medical benefit.  Discussions around partial self-insurance should take place at least 120 days prior to contract renewal.

In Southeastern PA, Independence Blue Cross (IBC) continues to be the predominant insurer.  For 2019, employers covered under IBC’s fully-insured platinum, gold, silver and bronze plans will likely see some relief (employers with under 50 employees).  Based on carrier communications, these plans should anticipate low single-digit increases for the upcoming year.  It is important to note that there are often underlying policy changes that should be monitored.   For example, a plan may have a similar name but the out-of-pocket maximum may have risen for the upcoming year.  For fully-insured plans of all sizes, additional services such as acupuncture, telemedicine and a college tuition benefit will be covered in 2019.

Aetna, CIGNA and United Healthcare (UHC) are all options in our area.  Each takes a different view of the market.  Aetna and CIGNA continue to invest in their partially self-insured programs and are a competitive alternative for many employers.  United Healthcare has revised its fully-insured portfolio to include programs like Motion (an option for employees to earn HSA contributions based on their physical activity) and Navigate (a gated/HMO style option that provides cost savings for employees that select a primary care physician to oversee their care).  UHC has other consumer centric options as well.

This is just a snapshot of the many components that go into healthcare.  Our office will continue to review changes and communicate them to you.

We are here to help!  Please don’t hesitate to reach out with your questions. 

 

 1 National Health Expenditures 2016 Highlights,  https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata/downloads/highlights.pdf