Insurance premiums again see double-digit increase

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For the ninth consecutive year, the Colorado health insurance market experienced a double-digit rate increase.

The  annual Lockton Benefit Group survey shows that premiums statewide will increase 11.8 percent next year.

“This survey is significant in that it demonstrates that the rate of increase in the cost of coverage in Colorado greatly exceeds the national average,” said Bill Lindsay, president of Lockton. “This makes it harder for Colorado employers to compete. Moreover, the resulting plan changes place Colorado workers at a greater disadvantage in terms of higher deductibles, out-of-pocket expense and more significant premium cost sharing than their counterparts nationally.”

More than 79 percent of employers will pass at least some portion of the rate increase to their employees through plan changes and premium increases. Most employers will focus on increasing the amount employees contribute for coverage.

In addition, 41 percent of employer respondents said medical plan deductibles were $1,000 or higher, and 70 percent said their medical plan deductibles were at least $500 — again, higher than national reports.

To offset costs, 24 percent of employers will offer a health savings account/high deductible health plan next year. Last year, only 21 percent offered the plans.

Other findings:

Only 32 percent of employers offer a health maintenance organization plan, down from 44 percent during 2008. Most employers are offering preferred provider plans with higher deductibles and higher out-of-pocket expenses.

85 percent of employers reported that plan cost increases are a major health care concern.

For the third year, provider quality outranked employee dissatisfaction with their benefit as an area of concern.

There is a continued strong interest in self-funding among Colorado employers. This trend remained the same, with employers reporting 33 percent as self-funded during 2008 and 35 percent during 2009.

About 36 percent of employers in Colorado are evaluating whether to offer a wellness plan during 2010 as a cost-containment measure.

Medicare cuts

Doctors are facing draconian cuts to Medicare reimbursement next year — but they are holding out hope that Congress will once again stave off the changes, as it has for the past four years.

The Centers for Medicare and Medicaid Services said the cuts will equal 21.2 percent for the nation’s 1 million doctors and health care providers who are paid under the Medicare Physician Fee Schedule, which sets payment rates for more than 7,000 types of services in physician offices, hospitals and other provider settings.

The law requires CMS to adjust the payments annually based on a formula adopted during 1997. The formula has created cuts in reimbursement fees every year since 2002, and 2010 will be no exception.

However, Congress has always prevented the cuts.

“The administration tried to avert the pending fee schedule cut in the FY 2010 budget proposal that it submitted to Congress and remains committed to repealing the SGR (sustainable growth rate),” said Jonathan Blum, director of the CMS Center for Medicare Management. “In the meantime, CMS is finalizing its proposal to remove physician-administered drugs from the definition of ‘physician services’ for purposes of computing the physical fee schedule update. While this decision will into affect payments for services during CY 2010, CMS projects it will have a positive effect on future payment updates.”

The cuts could be offset for some doctors — general practitioners, family physicians, internists and geriatric specialists. Rules being considered and modified by the department could increase payments by 5 percent to 8 percent, slightly reducing the effect of the other payment reductions.

Workers’ compensation

At a time with other insurance costs are skyrocketing, Colorado’s employers could see as much as $84 million in reduced premiums for workers’ compensation insurance.

Insurance Commissioner Marcy Morrison said the 9.7 percent reduction in insurance premiums, known as loss costs, will go into effect next year.

Savings to consumers also will be significant, but smaller than the maximum projection because rate filings will be made by insurance companies before the reduction begins Jan. 1.

The loss cost reduction is based on a decrease in the number of claims filed during 2008, Morrison said.

The National Council on Compensation Insurance, a rating and advisory organization, collects data about workers’ compensation claims for the insurance industry, and publishes loss costs that form the basis for all workers’ compensation premium determination. It provides information to 38 states.

Amy Gillentine covers health care for the Colorado Springs Business Journal.