Health insurance rates still a struggle for some employers

Renewal dates are fast approaching for many employers’ group health insurance policies, and while it’s difficult to discern a common trend for 2016, it appears some businesses will not face the steep rate hikes of years past.

In some cases, independent brokers in San Antonio have successfully negotiated to reduce the suggested price hikes for large employers so their health insurance premiums will stay the same or go up only slightly next year.

But, as always, there are exceptions. A few employers are finding they’ll have to weather another year of significant price increases if they want to continue providing group health benefits to their workers.

“I think employers have been so beaten up now for the past several years that nothing shocks them anymore,” said Janna Hamstra, owner of Hamstra Benefit Solutions in San Antonio. “They kind of expect the worst.”

At the Bank of San Antonio Insurance Group, many employers on the client roster are seeing rate hikes below 10 percent or 15 percent, while others aren’t seeing rates go up at all, President Mike Grossman said.

Maria Lipscomb, president of Customized Group Benefits LLC in San Antonio, said her clients’ premium increases for 2016 have remained below 10 percent.

But the bigger rate hikes of years past means even a modest price jump in 2016 can pack a wallop, said independent broker Loretta Camp.

“We’ve had so many years of double-digit increases back to back to back that some of those numbers are getting to be fairly large,” said Camp, co-owner of Davidson Camp Insurance Services and spokeswoman for the San Antonio Association of Health Underwriters. “Even if you go in and say, ‘Hey, it’s a good year this year, we only got an 8 percent increase’ — 8 percent of a $2,000 family rate is still a chunk.”

Employers buying health insurance for their workers are wary and skeptical and don’t feel rate hikes of any size are justified, Camp said.

The health insurance rates that employers pay are calculated differently depending on the size of the business.

Small employers with 50 or fewer people on the payroll are subject to rates based strictly on their workers’ ages and geographic regions.

Midsize employers with 51 to 99 workers pay rates based on a combination of pooled risk and their employees’ ages and geographic regions.

Large employers with 100 or more people on the payroll pay rates based on their own claims history, risk and employees’ demographics.

A growing number of businesses, particularly those continuing to struggle with escalating premiums, are considering becoming partially self-insured so they don’t have to depend entirely on insurance carriers for health coverage, the independent brokers said.

Partially self-insured employers pay all of their workers’ health claims up to a pre-determined monetary amount ranging from $20,000 to $100,000 per claim, depending on the size of the workforce. For claims exceeding that threshold, a stop-loss policy that the employer purchases from an insurance company kicks in and pays the remaining costs.

Hamstra said “quite a few” of her clients — particularly employers with healthy workforces — are moving toward such an approach because they believe they will save money and have greater control of their health benefits. The concept is being embraced by businesses of all sizes, she said.

Partially self-insured employers take on more risk to some extent, Hamstra said. Cash flow and budgeting can be challenging because claims may vary widely from time to time. There also may be additional reporting and compliance issues of which self-insured business owners need to be aware.

But most employers, particularly small and midsize operations, already have made all the adjustments possible to their health benefits packages and can’t put any more financial burdens on their employees, Hamstra said.

“There’s no increasing deductibles any more than they already have; there’s no passing off the costs to the employees any more than they already have,” Hamstra said. “It used to be in the past you could make some little tweaks here and there … and employees wouldn’t necessarily feel a loss. But now a lot of employers are already at that threshold.”

The San Antonio Orthopaedic Group is one local employer that is strongly considering becoming partially self-insured.

The medical practice, which has around 275 employees, has faced “skyrocketing” health insurance premiums for the last four years, Chief Operating Officer Chris Kean said. Those rates went up 42.5 percent last time and are projected to go up almost 35 percent in 2016, she said.

“We no longer consider this a benefit,” Kean said of the group’s current insurance plan, issued by a national carrier she declined to identify. “As a matter of fact, it’s difficult to recruit and retain employees because of the premiums that we’re faced with.”

The current policy’s plan design is no longer affordable, and some employees have become angry with the situation, she said.

“We feel like if we can go self-funded, we’re going to pay those claims directly. We’re going to have true transparency in what we’re paying for and direct contracting ability … We’ll be engaging in the market the same way that insurance does” by directly contracting with health care providers and forming a provider network, Kean said.

“Our goal is to bring back a health plan that is a benefit to our employees,” she said. “And I believe we can do that. The pendulum has to switch — and it has to switch back to something that is reasonable and affordable for health care.

“Insurance carriers need to know something — we don’t need them. They need us. They need us as members, and they need doctors.”

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