It’s open-enrollment time, which for many businesses mean an annual letter informing you that insurance premiums will go up 15% or more in 2010. The letter is quickly followed by lament and panic as you try to find a balance between what the business can afford and what will have to be deferred to employees. It’s a stressful end of year ritual for companies that take great pride in providing healthcare benefits to their employees and understand their role in employee retention.
2010 is somewhat of a “normal” year, meaning increases are in-line with the annual increases that have occurred, to the tune of 131%, during the last decade, according to an annual survey of nearly 3,200 firms regarding employer-sponsored health premiums by the Kaiser Family Foundation and the Health Research & Educational Trust.
What borders on the ridiculous is that these increases are levied with very little explanation. With every other type vendor invoice, businesses demand detailed accounts of services to understand how the costs accrue. Would you pay for a 15% increase from the vendor you lease your copy machine from without details on how many copies were made? Adding complexity to the already complex, most companies rely on outside individuals to advise on health care benefits and these individuals make money off your renewal.
The baffling part is that most businesses have come to accept this annual exercise in futility as a norm and most feel ill-equipped to do anything about it – forcing the decision to either incur the cots, defer the costs to employees or do away with healthcare benefit options altogether. It’s a lose, lose, lose situation.
Beyond 2010, new industry fees associated with Healthcare Reform bill will add significant costs to health plan coverage, according to a report by Pricewaterhouse Coopers. The finding is consistent with the judgement expressed by Douglas Elmendorf, director of the non-partisan Congressional Budget Office (CBO) who recently said “that piece of the health reform bill would raise insurance premiums by roughly the amount of the revenue collected.”
The report projects that the industry fees are an additional business cost that will be passed through to consumers in the form of higher prices. The fees on medical device and pharmaceutical manufacturers will impact the entire market, while the fees on health plans will impact premiums for insured plans.
I’d be curious to get feedback on how your company manages through the annual open enrollment period. Do you feel like you have a sense for why you see significant increases year-over-year? What, if anything, are you doing to uncover these costs?
- Keith Lemer
