premiums

RECENT POSTS

Report: Breathtaking Jump In Insurance Premiums

In 2011, insurance premiums increased by 9 percent -- but don't blame health reform

NPR’s Julie Rovner offers this depressing news about health insurance premiums: they’re up — a lot. Based on the 2011 annual survey of employer health benefits by the Kaiser Family Foundation and the Health Research and Educational Trust, Rovner writes:

…the bad news is pretty bad. Premiums in 2011 jumped by 9 percent, with the average price for employer-provided family coverage topping the $15,000 mark for the first time. Ouch.

Even worse, says Drew Altman, Kaiser Family Foundation president and CEO, is that the increase comes at a time “when wages aren’t going up, and in fact wages are actually declining in real terms, and that means that the increase is especially painful this year for working people.”

Rovner makes a point of quoting Altman saying that national health reform is not the culprit. Continue reading

A Call To Freeze Health Insurance Premiums

Dan Smith, senior pastor at First Church Congregational in Cambridge and Sarah Higginbotham say outrageous premium increases must stop. (Photo/Martha Bebinger, WBUR)

WBUR’s Martha Bebinger reports:

Sarah Higginbotham has a health insurance story that is becoming all too familiar. Three years ago, when she was still single, she took home $900+ every other week from her part-time job, after paying her share of her health insurance premium. Then Higginbotham got married, had a child and switched to a family plan.

“My paycheck has dwindled to $164 every two weeks,” she says with a look that shows she still can’t quite believe it. “Basically I’m working for my health insurance here.”

Higginbotham’s dramatic drop in take home pay wasn’t just a result of moving from individual to family coverage. Her employer, First Church Congregational in Cambridge, saw premiums rise 17% this year, an increase senior pastor Dan Smith calls outrageous.

“People who have felt that the market could somehow regulate it (insurance rates) are being proved wrong right now,” says Smith, his deep voice rising. “When we sit down with some of the leaders in the health care industry, we wonder if they do feel the pain that some of us are feeling.”

To share the pain, the Greater Boston Interfaith Organization (GBIO) and Health Care for All are proposing what they call a bold step. They want a one year statewide freeze in the cost of health insurance.

“The current escalating costs of health care are unsustainable,” says Health Care for All director Amy Whitcomb Slemmer. “So we are asking all the interested parties to take a time out until we can get to a more comprehensive solution.” Continue reading

Small Business Health Insurance Costs: Are You ‘Getting Creamed’ Again?

Refracted Moments/Flickr CC

“Can you please do a story on the new health insurance rates that just came out?” A reader wrote recently. “Small businesses are getting creamed!! Again!”

I have yet to nail them down, but there are second-hand reports floating around of small businesses receiving notice that their health insurance premiums will rise 20, 30, even 40% this year. Readers, is this happening to you? Please let us know in a comment below. (It’s certainly happening in New Hampshire, as this recent New York Times story reports.)

How can this be, when word came out just last month that base rates for health insurance in Massachusetts would rise only in the single digits this year? Because there can be a powerful difference between the base rate and what we may actually pay. Joseph Murphy, commissioner of the state Division of Insurance, explained:

Health insurers file “base rates” with the state, he said, “and on top of that, the carriers can apply — per the insurance statutes — adjustments for the type of industry, where the business is located, the size of the group and the age of the group. Those are allowable, and those can adjust those base rates considerably — or a little — upward.”

To recap last year: The state turned thumbs down on many of the double-digit base rates filed; the insurers sued; a settlement followed; and base rates remained in the single-digit range.

This year, Joe Murphy said, “We recognize that because of these allowable factors, some individuals and small businesses are still seeing significant rate increases, and that’s why we’ve got more to do.” The last year of rate limits saved about $106 million in premiums, he said. Continue reading

Pointed Debate Over Triple-Digit Premium Hikes For Some Brigham Part-Timers

Last week, we posted this story about impending triple-digit hikes in the health insurance premiums that hundreds of part-timers at Brigham and Women’s Hospital pay. It prompted cogent comments both on CommonHealth and off the record, in written comments beneath the post and to me verbally.  I highlight a few of them here. And I’d sum up the debate as between those who put cost-cutting first and those who say cost-cutting on health insurance should not begin with part-timers. Responses welcome!

This came in an email today from a non-Brigham full-timer who’s highly attuned to health costs:

1) Even with these increases, the part-timers will pay less than I do for a family plan and I have what I consider to be good insurance. So for half the time they get a better benefit. Meanwhile, the state is leaning towards eliminating coverage for 23,000 legal immigrants in February. Who’s really suffering?
2) BWH is arguably one of the most expensive hospitals in the world (US is most expensive country, MA is most expensive state and BWH is one of the top 3 highest paid hospitals here.) If a percent of their inflated charges are overly generous benefits, then we must critique those benefits, not support them.

Another comment along similar lines, from the Comments section:
$6,500 is a bargain for a family plan! When you do the math, it sounds to me like the part-time employees are the hospital are going from a great deal to a good deal. Hard to feel sorry for them when they are among the highest paid hospital workers in the city.

One more on this: The truth is our part time work force is very important, but at the end of the day, this change is just one of the things the hospital is doing to cut cost. You can’t fault the Brigham for being “high cost” and then get mad when they look for ways to bring cost down, especially when it’s correcting an inequity. Just my 2 cents.

And a hard-hitting response:
“Correcting an inequity?” As in it is okay for full time employees to continue to feast on 90% coverage, while telling part-timers to suck it up not based on hours worked (which are often more than they are paid for) but based on hours paid for? You should appreciate that “equity” is in the eye of the beholder. Why not provide benefits based on how much profit your job earns for the hospital? Wouldn’t that be “fair?”
Sure, an employer can offer whatever pay/benefits it wants, and the employee is free to accept or reject, but the employee has a right to expect the hospital to stick to the deal they had when hired. A change in benefits of this magnitude is a pay cut, Period.

Now some interesting new territory from the Comments section today, an employee writing that Brigham and Women’s is not just raising its part-timers’ premiums, it’s “cost-shifting” — that is, encouraging employees to get their health insurance elsewhere:

Here is the main issue: Brigham and Women’s Hospital, which played an important role in crafting Massachusetts’ “shared-responsibility” model of health reform, is cost-shifting to other employers and to the state. At the same time it slashed part-time employees health benefits, it increased the incentive for employees to find insurance elsewhere. In 2011, the hospital will pay an ADDITIONAL $2400 to a full-time employee who either goes uninsured or finds coverage elsewhere. In other words, the hospital is paying off employees to drop Brigham-sponsored insurance in favor of any other plan. But a part-time employee who has no other place to buy insurance for her family must PAY $5000 ADDITIONAL for the same insurance they had last year (and about $7000 ADDITIONAL in 2012). For employees who don’t happen to have $5000 – $7000 extra in their family budget to buy that insurance, becoming uninsured is the only option. Cost-shifting to other employers and to the state – that is Brigham and Women’s version of “shared responsibility.” Continue reading

Triple-Digit Premium Shock For Some Brigham Part-Timers

The young college grad went to work for Brigham and Women’s Hospital because she believed in its medical mission. Plus, it offered good benefits. As a part-time, entry-level researcher, her salary was modest but her health insurance plan — the cheapest option, popular among healthy young people — was free after the first year.

No longer. As of Jan. 1, she’ll have to pay $47 a week for that bare-bones plan, and because she has that option, she cannot qualify for state-subsidized health insurance. She might have to move. She even toyed with the idea of becoming uninsured.

“I’d be better off going to work at the Gap,” she said.

At a higher pay-scale, a part-time administrator at the Brigham is facing a similarly dramatic pinch. She had been paying $36 a week for her family health insurance. That jumps to almost $130 a week as of Jan. 1. “My family’s budget can’t absorb this,” she said.

With health insurance costs spiraling ever upward, we’re all feeling premium pain. But what’s happening with hundreds of part-timers at Brigham and Women’s Hospital right now flies off the charts. Some part-time workers will see their health insurance premium payments rise by 300, 400, even 500% for the coming calendar year, and a total of 700% above current rates in 2012. Just for reference, when premium hikes hit double digits, politicians tend to throw fits. These workers are facing triple digits.

“The percentage increases that are being given to these part-time workers are really quite extraordinary,” said Nancy Turnbull, associate dean of the Harvard School of Public Health. “Part-time workers tend to be lower-paid,” she said, “so this is very regressive.”

Other employers, she noted, including Harvard, structure their premium payments so that the more highly paid workers pay more. In fact, as The New York Times reports, it’s a national trend for companies to try to shift more of the health insurance burden to better-paid workers. Increasing the burden on part-timers tends to do the opposite.

Brigham and Women’s says the shift is a correction that will bring the hospital in line with part-timers’ premiums at other hospitals, and that it is part of a benefits overhaul aimed at saving 100 jobs.

“Asking part-time employees to contribute to their health benefit on a pro-rated basis is a standard at hospitals and businesses, both locally and nationally,” Erin McDonough, the hospital’s senior vice president for communication and public affairs, said in a statement. “It is important to note that the FY’11 rates for part-time employees are highly competitive.”

For this coming year, the hospital will ease the immediate pain by subsidizing the workers’ cost increases by 25% for those who earn over $20 an hour and 50% if they earn less.

An estimated 2,000 part-timers working 20-39 hours a week are affected by this change. Of the 2,000, about 400 work 20 hours a week, and will see the greatest rises in their premiums. Full-timers are all but untouched; their premium payments rise just an unremarkable 8% next year.

‘The logic’

“Cry me a river,” some will say of the part-timers’ financial distress. “At least the part-timers get some employer help with their insurance. And they had it unusually good for a very long time. Even with the hikes, they’ll be paying roughly half the average cost for a family plan in Massachusetts.” True. And it’s happening all over: a recent Massachusetts Hospital  Association survey found that 71% of hospitals reported increasing the premiums their workers paid.

But the financial pain that Brigham part-timers face this winter seems emblematic of the burden that health insurance premiums impose on many of us, only more so. And as the disillusioned young researcher put it, the adjustments that the hospital is making target “the people who are less likely and less able to pay — I don’t see the logic.”
Continue reading

Obama To Insurers: Spend It On Medical Care, Or Else

HHS Secretary Kathleen Sebelius wantes insurers to spend more on medical care and less on administration

It almost sounds like a headline from The Onion, but AP reports that the Obama administration will require health insurers to use premium dollars to pay for actual health care.

The regulation unveiled by the Health and Human Services Department calls for insurance companies to spend at least 80 cents of the premium dollar on medical care and quality. For employer plans covering more than 50 people, the requirement is 85 cents. Insurers that fall short of the mark will have to issue their customers a rebate.

Part of the new health care law, the rule is meant to give consumers a better deal. Administration officials said it will prevent insurers from wasting valuable premiums on administration, marketing, and executive bonuses. “While some level of administrative cost is certainly necessary, we believe that they have gotten out of hand,’’ said Kathleen Sebelius, secretary of Health and Human Services.

Health Insurance Premiums For Dummies

What is an insurance 'base rate' anyway?

A faithful CommonHealth reader just sent me this blog from Harvard Pilgrim Health Care which seeks to explain exactly how insurance premiums are calculated, and how state regulations affect those rates.

Warning: Harry Potter & The Deathly Hallows, this is not. It’s dry and dense, but ultimately, illuminating. And of course, consider the source (an insurer) when you read the bits that suggest state laws governing rate-setting are somewhat onerous.

The post begins with an explanation of “base rates:”

So, let’s start with how the premium rate is calculated for a typical merged market customer. We start with something called the “base rate,” which can be thought of as a dollar amount that the health insurer needs to charge for an “average” customer. (And, by the way, in Massachusetts, about 90% of what the insurer needs to charge goes to paying for medical claims.)

But not all customers are “average,” and the laws in Massachusetts allow health insurers to modify the base rate for each customer to reflect the impact of certain factors. These “rating factors” have demonstrated their reliability in explaining the cost of claims a customer will likely incur in the future.

How we Adjust the Base Rate

What factors do state regulators allow?

— Age: The age factor for an employer group measures the average age of the members covered through that employer.

— Industry of the customer: Employees of certain industries consistently show higher or lower medical costs relative to the average. Continue reading

EMC To Offer Employees Who Meet Health Goals A Break On Premiums

EMc headquarters in Hopkinton


WBUR’s Martha Bebinger reports:

EMC, the data storage company seen as a model for employers working to improve employees’ health, is taking the model to the next step.

EMC was among the first corporations nationwide to survey employees’ health and then connect them to nutrition or fitness counselors through Wellness programs. Next year, EMC will ask employees to choose a personal health improvement goal — to lose weight or lower their cholesterol, for example — and give those who meet the goals a substantial reward: a 12% break on insurance premiums.

Says Delia Vetter, the Senior Director of Benefits at EMC: “It’s smart on two fronts. One, it contains health care costs and two, it also increases productivity.”

Many employers have felt that discussing employees health is an invasion of privacy but Wellness programs are gaining interest as health care costs continue to rise.

Cost Hike: Levy Blames Insurers For Lack Of Efficiency, Insurers Fight Back

Paul Levy, the perpetually newsworthy CEO of Beth Israel Deaconess Medical Center, makes a crisp argument today blogging about the rising cost of health care.

Levy says while insurers often whine about the “underlying rise in medical costs” as the key driver of higher health insurance premiums, there is, in fact, another critical culprit: outsized administrative expenses racked up by the major health insurers, on average about 9.3 percent annually.

Levy’s Exhibit A is a February 2010 report issued by the state Division of Health Care Finance and Policy on premium levels and trends in the private insurance market:

“How can this be the case?” Levy wonders. “In other financial services industries, unit costs of transactions have gone down, not up. What is it about health care that suggests the opposite should be the case?”

Not to be outdone, the Massachusetts Association of Health Plans gave me a fairly lengthy response. Touche:

Reducing administrative expenses in health care is important and efforts are underway, but those costs are not what is driving health plan premiums. More to the point, talking about administrative costs distracts from focusing on the the major cost driver, which is escalating medical expense. Continue reading

Why Are Health Insurance Rates Rising And What Does It Mean For Consumers? Ask The Experts.

WBUR's Martha Bebinger hosts an online chat today at noon about rising health insurance premiums

WBUR’s Martha Bebinger discussed rising health insurance premiums on Morning Edition today, and told host Bob Oakes that consumers will soon start to feel the impact, including higher deductibles and co-pays. Also, some plans may start charging you more if you choose certain doctors and hospitals.

Ms. Bebinger explains: “In order to keep the rates from going up even higher, we will see higher deductibles: $1,000 had been the accepted rate in Massachusetts, but it could go up to $1,500 or $2,000. We’re going to see higher co-pays, we’re going to see tiering for doctors and hospitals; you know the way we pay different co-pays for prescription drugs now, you’ll see that for doctors and hospitals as well, based on their rating.”

If you’re confused by any (or all) of this, join Ms. Bebinger and Brian Rosman, research director with the advocacy group Health Care For All for a live online chat at noon today on WBUR.org. They want your input! And they wonder: Can you still afford health insurance? Are you changing where or when you get care based on the cost? What are your suggestions for lowering health care costs?

Join the discussion at WBUR.org