Smart Benefits: 2013 Health Insurance Rate Increases Expected Soon
Monday, July 30, 2012
The Office of the Health Insurance Commissioner (OHIC) has set a clear expectation with the state’s group insurers that they submit a medical trend less than 4%. And the state’s three carriers doing business here have responded with initial rate filings closer to that number – the lowest in five years.
For small groups (50 or less employees), the carriers have requested the following increases:
For large groups (employers with 51 or more employees), Rhode Island’s insurers have filed for the following rates:
Tufts Health Plan: 6%
BCBSRI’s filings are lower than the other two carriers due to an expected, one-time savings from a contract with a new pharmacy benefit manager that will become effective January 1, 2013.
Medical spending increases because members use more services and/or the price of those services increases. This year, the cost drivers behind the higher rates filings include:
increases in medical expenses (i.e. inpatient, outpatient and pharmacy costs)
contributions to reserves
other miscellaneous expenses
What’s missing? The cost of healthcare reform. That’s because the impact of the Patient Protection and Affordable Care Act results in taxes that are added to the approved rate filings. Therefore, employers should expect another 1.9% to be added to BCBSRI’s rates, .07% to Tufts Health Plan’s and 1.8% to UnitedHealthcare’s rates.
No matter what final rates are approved, not every employer group in Rhode Island will see the same increase. Employer-specific characteristics like age, sex and product offerings adjust rates up or down, resulting in wide fluctuations in rates among employers.
While Rhode Island’s insurance carriers are lower than they’ve been in five years, local employers expected something else: a zero increase. During OHIC’s public comment period, most employers requested no increases in the rate filings for 2013, citing the sate’s poor economy, the sacrifice employers and employees have made year after year to absorb more costs, and reduced benefits as reasons for their plea.
It will be interesting how OHIC responds, and what the impact will be on local businesses.
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