Health insurance

Rising health insurance costs return to pre-pandemic pace

After a brief respite, increases in health insurance rates are returning to their pre-pandemic pace.

In the so-called small group market, which covers employers with 1 to 100 employees, New York state regulators have approved an average premium increase of 7.6% for 2022 – well below the 14% demanded by insurers, but nearly double the approved 4.2% average increase. for 2021. This smaller increase in 2021 reflected a postponement of care in 2020 due to COVID, experts said.

“We were finally going to get back to pre-pandemic levels,” said Gregg Pajak, president of the WizdomOne group of companies in Islandia.

“Medical claims declined dramatically in 2020 due to the postponement of elective and elective services, but medical claims increased in 2021 as New Yorkers catch up on medical appointments and postponed services,” according to the Department of New York State Financial Services, which approves insurance rate increases. As a result, trends in medical claims, the rate of increase in medical costs and usage, have returned to pre-pandemic levels, DFS said.

The 7.6% is an average for several insurance companies and plans statewide, Pajak noted, so some plans will increase more than that average while others will see smaller increases.

James Eckardt, president of Peak Advisors Inc., a Holtsville health insurance broker, says premiums are generally more expensive on Long Island than in other parts of the state. That’s because services are more expensive here, with Long Island being a high-cost area, he says.

The 7.6% increase for small businesses is higher than the planned increases for large businesses with more than 100 employees, where rates are set individually with carriers.

Large employers expect their costs for medical and pharmaceutical bills to rise 5.2% in 2022, according to insurance consulting firm Willis Towers Watson.

Economies of scale may help keep increases for large companies lower than for small companies, but it probably has more to do with differences in risk, says Dr.Jeff Levin-Scherz, CEO and chief health officer. of the population at Willis Towers Watson. .

Since small businesses tend to subsidize employee health insurance costs less, which means employee premiums are higher, there is likely a smaller proportion of employees who choose to purchase insurance. Those who take it are probably the “sickest” population, using more services and subsequently increasing insurance costs, he says.

With higher costs looming, some employers are looking to contain costs by implementing spousal supplements, for employees who choose to add a working spouse, or by offering closer supplier networks, says Levin- Scherz. See tinyurl.com/7zcfwvsw

Eckardt says he’s seeing more and more employers opting for tighter networks, which typically have lower premiums in exchange for fewer participating physicians.

Pajak says more and more customers are considering high-deductible health plans coupled with reimbursement vehicles like a health savings account to cut costs.

Others join professional employers’ organizations, which bring together employees from many companies, giving them greater bargaining power, says Anthony Millaci, CEO of Manhattan-based CostMarc Consulting Group, which helps clients contain costs and increase profits.

Businesses can achieve between 15 and 20 percent in health insurance savings by switching from the small group market to a PEO, he says. They have to balance any savings against the fees they would pay to a PEO, which could offer other services like payroll and HR functions. Millaci said his company negotiated PEO fees for some clients from $ 150 to $ 80 to $ 95 per month per employee.

Joining a PEO has saved Progressive Care Solutions at Syosset about $ 75,000 per year in health insurance costs for its 75 New York employees and over $ 100,000 across the company, says Melissa Messite, Director of Operations at Progressive, a provider of primary and specialty care services to nursing homes.

She said that the PEO membership, which A&C Management Group at Great Neck helped her secure, has also enabled Progressive to offer more options to employees, including group life insurance and other advantages.

“It’s great for recruiting,” Messite said.

Briefly

86%

Percentage of employers who said achieving affordable health insurance costs for employees, especially low-wage employees, is a top priority.

Source: Willis Towers Watson


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