Workplace of Choice

January 1^stis the time of year that many companies go through their annual employee benefits renewal.  Year after year we see close to double digit increases in health insurance costs, but yet the annual cost of living increase is typically in the 3-5% range.  The end result is that the cost of healthcare for both the consumer and the employer is rising exponentially.  Unfortunately, this year is no different.  For 2011 there is no increase in Social Security’s COLA because 2009 wages decreased from previous years, but yet, benefit rates continue to increase.

In Massachusetts, Blue Cross Blue Shield has announced an increase of 9.9% in health care trend (inflation) for 2011, and Tufts and HarvardPilgrim both estimate 10-10.5% increases.  Trend does not necessarily directly correlate with the actual increase an employer may realize.  Trend is the increase in health plan cost, which is comprised of increase in services provided, increased payment to providers, increases in fixed administration costs, and drug costs.  Although this plays a role in the rate increase an employer may see, the rate increases could actually be quite different depending upon the employer’s business, the employee demographics, and the employer experience (if over 100 employees), etc.

An employer with less than 100 lives (non-credible – fewer than 50 employees are also “pooled”), will see an average rate increases that will range from 10% to 25% depending upon changes within their employee populations.  That being said, employers may see up to an increase of 20 to 35% if they have had major changes in their populations. (redundant sentence?) When an employer is over 100 covered lives, their own experience plays a factor in the rate.  If the client is 100 plus, they are likely to see an increase of 10-11% but this will differ based on their claims experience, demographics and plan design changes.

The local MA carriers, Tufts, BCBS, Harvard and Fallon, are not rated by Standard & Poor’s, Moody’s or AM Best like other insurance companies because they are “non-profits.”  However, they are rated by the NCQA (National Committee on Quality Assurance) and financial strength is considered in the rating along with member service, benefits provided, network management, and other quantitative factors.  Massachusetts is fortunate to have high quality carriers with HarvardPilgrim rated #1 by the NCQA in the country, and BCBS of MA, Tufts and Fallon are all ranked in the top 15 (Tufts ranked #2 in 2010).  The good news/bad news here is while we’ve got great insurance coverage in MA, there is a price that comes with it.