Huge spikes for individual health plans but not for groups
The huge spike in health insurance premiums in the individual market due to the Affordable Health Care Act hasn’t materialized for employer groups plans, the major player in Alaska health insurance says.
Premera Blue Cross Blue Shield predicts premiums will rise “in the single digits” for most group policies in 2015.
The increases will range between 5 percent and 10 percent depending on the group, according to Jim Grazko, president of Premera Blue Cross Blue Shield of Alaska.
Jim Grazko was named to the position previously held by Jeff Davis, Premera’s Alaska president for many years.
Premera’s “small group” plans, from two to 50 members, that are in the ACA metallic plans, will see an average 5.3 percent increase in 2015 premiums, on average, he said. Groups of 51 to 99 employees will see increases that range from 6 percent to 10 percent.
Increases for large group plans, which have more than 100 members will be 7.4 percent on average.
Grazko said the average increases for the group plans are similar to those for groups in Washington State, where Premera is also active.
“These are overall averages. The cost for a specific plan depends on how it is designed,” he said.
The amount of an employee’s deductable or co-share of costs will influence the cost for a particular group plan.
“Large group rates can vary widely depending on the size of the group because it’s heavily driven by the claims experience,” wrote Melanie Coon, a spokeswoman for Premera, in an email. “There are going to be a few groups every year who get rate increases due to their claim costs going up more than expected and the overall claims activity (medical costs) of that group. The rate increase is relatively low because there are more people to balance out any high medical costs hitting the group. The trend for the last few years has been steady in the single digits.”
Rates for 2015 have been filed with the Division of Insurance for groups enrolled under the Affordable Care Act “metallic” plans, to be effective Jan. 1, while other group policies issued by Premera will see the new rates as they renew through the year.
“We’ve had a lot of success in keeping the cost growth down,” he said.
Grazko credits employers and employees of firms who have embraced initiatives like employee wellness programs. Surprisingly, Alaska employers seem to have taken to those to a greater degree than in other states like Washington, he said.
Premera plans more initiatives to help control costs in 2015. One is a “virtual care” program that will allow members of plans reach a physician, either their own doctor or a physician in a network, electronically night or day. This could avoid costly trips to emergency rooms and visits to doctors’ offices on very routine matters, Grazko said.
Grazko said Alaska medical costs are still 35 percent to 40 percent greater than those for comparable procedures in Washington state and that another cost-control initiative is offered by Premera, a “medical travel” option for patients to get care in the Lower 48 at less cost and to have travel and accommodation expenses paid for.
The travel option is becoming more popular. It was suggested by some of Premera’s larger customers who self-fund health costs. It was first made available to them in 2012. The travel benefit will be offered to all groups, as well as those with individual policies in 2015 and 2016, Grazko said.
Becky Hultberg, director of the Alaska State Hospital and Nursing Home Association, said she has heard similar reports of only modest increases through insurance carriers she works with as well as brokers who work with several insurers.
“The small group market in particular (mostly small companies) seems to be doing a pretty good job of cost management,” Hultberg said. “Our association just renewed our policy for our employees and we were very pleasantly surprised.”
Hultberg was previously state Commissioner of Administration before joining the Hospital and Nursing Home Association and in her state position gained considerable experience in health care cost issues while administrating the state active and retired public employee benefit plans.
“One of the reasons why a huge run-up in costs from the Affordable Care Act didn’t materialize was that many group plans already covered things that were among the health law’s new requirements, like 100 percent payment for preventative screenings,” she said.
The individual insurance market in Alaska is another story. Rates in this market segment in Alaska will jump an average of 37 percent for Premera members and 27 percent for Moda Health, the two insurers selling to people in the individual market exchange.
That’s due to circumstances unique to Alaska, the very limited number of people in the pool and the fact that it includes a small number of people with serious health problems, which raised costs to an unusual extent.
“This is all about size of the pool and the risk profile,” Hultberg said. “We heard predictions that this would happen,” so it should be no surprise.
Individual insurance exchanges in states like Washington or Oregon, where there are much larger numbers of people enrolled, are actually seeing very small rate increases or even decreases in 2015, said Melanie Coon, a spokeswoman for Premera.
Premera’s new “virtual care” program is different than similar services now being offered in the market, Grazko said. The program is set up so that people can consult either their own physician or, if he or she is not available, another physician in Premera’s Alaska network.
If this doesn’t work, Premera has contracted with a national firm, Teladoc, to provide their members access to a certified physician anytime and anywhere in the U.S. That physician will be licensed to practice in the state that where the member is located, Grazko said. Teladoc will provide virtual care by phone, online video and image sharing.
“This would be useful in a situation where you wake up in the middle of the night with difficulty breathing. You get immediate consultation,” Grazko said, although a call to 911 might still be needed.
Another example is where there are routine questions about taking medication, he said. This could avoid a visit to the physician’s office. There are still charges for virtual care consultations but they will be typically lower than personal visits, although those can still occur.
Employers and insurers like Premera are adopting other strategies to help control costs, Coon said.
One trend is the rapid growth in Health Savings Plans where employees can set aside part of their earnings to fund medical costs, she said. Some employers contribute to these.
“These accounts make people feel like they have more skin in the game,” so that they think about how they are using health care services, Coon said. The result will generally be less utilization of services, and less cost for everyone.
Another trend, among insurers as well as medical providers, is more coordination when specific tests or procedures are needed. A good example of this is the use of advanced imaging like MRIs or C-T scans, Coon said.
There was a spike in these in Alaska when physicians appeared too quick to suggest them and for patients to request them. Now in many cases approval by insurers is needed.
This is not to discourage these tests when needed but to ensure they’re really necessary. Premera and other insurers have working out “best practice” models with health providers on many procedures, and when the usage appears to be deviating from the best practice model the insurer can question it.
Also, Coon said, too much radiographic imaging is not good for a person’s health, either.