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Prepare For Shocking Health Insurance Hikes
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Business New Haven
10/16/2000
By: John Florian
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It's that time of year to be calculating health-insurance premiums into your company budget for 2001. And like the certainty of death and taxes, you know those premiums will rise. But strap yourself in for possible sticker shock.
“There will be some surprises,” warns Steve Glick, president of Coordinated Financial Resources, the Orange-based administrator of insurance benefits for the Chamber Insurance Trust. The trust covers more than 7,000 member companies of chambers of commerce in Connecticut.
A recent New York Times article projects possible hikes nationally of 15 to 30 percent. And that's on the heels of this year's double-digit increase, says Glick. Overall, he says, people are living and “maintaining themselves longer today, and as a result, it costs more for total medical care.” Specifically, Glick notes the increasing expenses of prescriptions and in developing new technologies.
The meteoric rise in health-care costs threatens to put businesses in the sick bed if they continue to take it on the chin. That's why many are passing more of the load to employees through higher co-payments and deductibles. Another option is to shop for more flexible plans.
“People will move their coverage when they get rate hike increases over ten to 12 percent,” says Glick. “They have no other choice.”
Smaller carriers have less flexibility there, he adds, which sends more and more business to the larger insurers. “In Connecticut today there are fewer choices among carriers, but those that are left are bigger and better,” says Glick. “About 85 percent of the business in Connecticut now is listed with just three carriers.”
Working with an insurance agent who knows all the available products and plans is also important, he adds.
Still, Glick expects rising costs to send more employees into the cold world of non-coverage as small businesses find they can't handle their employees' premiums. “About 43 million people in this country are without insurance today,” he says. “And the way things are going, more people are expected to be without coverage, especially those involved with small businesses because there's just so much expense a small company can deal with.”
Will it never end? Glick says federal relief is on the way, no matter which political party wins in November. One concept is tax relief for long-term care insurance. “As the baby-boom generation ages, more and more people will need this type of coverage,” Glick says.
Another avenue is continuation of medical savings accounts (MSAs), established by Congress in 1996 and available to the self-employed and businesses with 50 or fewer employees.
Bennie Thayer, president of the Washington, D.C.-based National Association for the Self-Employed, credits MSAs with boosting insurance coverage for many people who were previously “priced out of the health care insurance market.” More than 25 percent of those purchasing MSAs were previously uninsured, he reports.
Here's how MSAs work. “Employers and consumers purchase high-deductible insurance policies at lower premiums,” Thayer explains. “The premium savings are then put in a medical savings account to fund the high deductible. The consumer pays for routine and preventive care with funds from the MSA. If there is money left in the account at the end of the year, it rolls over and can build up to pay for future health care expenses.”
For major problems, Thayer adds, the high-deductible insurance policy kicks in.
But time is running out for the MSA program, Thayer says. “Unless renewed by Congress, the MSA program ceases at the end of this year.”
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