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Sunday, 28 October 2012 10:15

Insurance premiums rising at slower rate for 2013

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WEST MICHIGAN — Health insurance costs are still rising, but the rate they’re increasing has somewhat abated.

That’s what data from Blue Cross Blue Shield of Michigan and a handful of national studies are showing for 2013.

Average premium increases for Blue Cross Blue Shield of Michigan’s small business clients for 2013 follow an easing in the growth of the cost for employee health coverage in the last two years.

Small business clients of Blue Cross Blue Shield of can expect an average 7.5-percent premium increase for Jan. 1, 2013 policy renewals. Clients of Blue Care Network, the HMO subsidiary of Blue Cross Blue Shield, will pay an average of 5.1-percent more for health coverage beginning in January.

Actual increases for individual employers will vary from the statewide average, which is based on the cost prior to any change employers make in their benefit package to mitigate increases.

While they remain a multiple of the consumer price index, the insurance premium increases for 2013 are decidedly lower than the double-digit growth that employers were often hit with years ago.

“Health care is and will continue to be a significant piece of any employer’s administrative budget, but we’re headed in the right direction,” said Jeff Connolly, vice president for managed care and West Michigan president for Blue Cross Blue Shield of Michigan.

Blue Cross Blue Shield premium increases for quarterly policy renewals in the small group market have averaged in the single digits for more than a year now. Between 2010 and 2011, premiums for policy renewals grew 9 percent to 13 percent.

Blue Cross attributes the moderating increases to the introduction of more cost-effective products, wellness initiatives and working with doctors and hospitals to improve quality, although Connolly cannot say whether the present trend will hold. The costs of new medical technology and new pharmaceuticals that may come to the market are among the unknowns in the future that can add to costs and drive up premiums at a higher rate, he said.

“One of our hurdles is the cost of specialty drugs and the increased usage of them,” Connolly said.

The burgeoning obesity rate that contributes to the rising rate of high-cost chronic medical conditions such as diabetes and heart disease — which “are not inexpensive on an annual basis” to treat — can also counter efforts to control costs, Connolly said.

About one-third of Michigan residents are now obese and “the recent trends say it’s not going to get better — it’s going to get worse,” Connolly said.

“If that continues to escalate then, understandably, it’s going to get more difficult to mitigate cost,” he said. “The first step to improving our health and lowering costs starts in what you see in the mirror every day.”

To address that issue, Blue Cross Blue Shield and other health plans have a greater array of policies that promote health prevention and wellness. The insurer will also continue to push initiatives that are designed to improve costs and quality.

Blue Cross, for instance, says quality improvements among care providers generated $232.8 million in cost savings for four common medical procedures — general surgery and cardiac, bariatric and angioplasty procedures — over three years. Efforts such as working with physician practices to integrate the patient-centered medical home model have led to lower hospital admissions and ER visits among patients in those practices.

“These programs are not stagnant,” Connolly said. “We’re going to continue to add other areas for improvement that will build upon the success that we had in the past. There’s a lot that we need to address.”

More than 3,000 physicians in Blue Cross Blue Shield’s care network are now designated as a patient-centered medical home practice. The insurer credits the care model with generating a 23.8-percent lower rate of hospital admission than non-medical home practices and a 9.3-percent lower rate of adult ER visits.

Blue Cross Blue Shield expects the medical home model to generate further gains.

“As that grows, the domino effect to the employers and the savings you recoup from that will continue to grow,” Connolly said.

The 2013 premium increases from Blue Cross Blue Shield are in line with national cost surveys that show premium increases moderating across the country as well.

Survey results this month by global human resources consulting firm AON Hewitt pegged the average increase across the country at 6.3 percent, pushing the average annual cost of a policy to $11,188 per employee nationally. Early results from a similar cost survey from Mercer found employers nationally expecting an average 6.5-percent cost increase.

Around West Michigan, large self-funded employer groups are seeing the smallest increases for Jan. 1 policy renewals, said Bob Hughes of Advantage Benefits. Hughes credits wellness initiatives that help to contain medical claims and the steady migration to lower-cost high-deductible health plans with helping to slow premiums increases.

Premiums for fully-insured policies are “all over the board,” Hughes said. Premium increases for high-deductible policies from Priority Health for employers with 50 or more employees that are experience rated, for example, have ranged from a low of 5 percent to a high of as much as 24 percent before benefit alterations by employers, he said.

Read 3863 times Last modified on Sunday, 28 October 2012 22:04

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