Health Care & Insurance  November 14, 2014

Brokers forecast bigger hikes in health-coverage

FORT COLLINS – Colorado officials were pleased when the forecast for health-insurance costs registered well below 5 percent on average for policies in effect in 2015 in Northern Colorado and the Boulder Valley, but many small businesses will see much larger increases.

According to the state’s forecast, statewide health-care insurance premiums will rise an average of less than 3 percent for small businesses, but in reality, many plans come with higher price tags and double-digit premium increases, according to health-insurance brokers on the Front Range.

Bill Lindsay, interim chairman of the Colorado Commission on Affordable Health Care and president of Lockton Benefit Group in Denver, said the arithmetic average used by the state to calculate insurance plan prices was “misleading.” The commission is tasked with analyzing health-care costs and reporting its findings to Gov. John Hickenlooper and state lawmakers.

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“What would have been a more accurate assessment is if somebody had done a weighted average,” he said. “In other words, the plans that got the heavy enrollment and were raising their rates should have been weighted more heavily, and those who had small enrollment but lower rates should have been discounted.”

Another issue is the difference in cost between plans that comply with the Affordable Care Act and those that are noncompliant but have been “grandfathered” in under the new federal law.

Small businesses that opt to buy compliant plans are seeing premium increases of at least 20 percent, said Jim Marsh, president of Hofgard Benefits in Boulder.

Other small businesses that kept noncompliant plans have seen smaller rate increases, he said. That’s because plans that comply with the Affordable Care Act have extra protections for consumers that have driven up plan costs.

“If you look at a noncompliant ACA health plan, and try to replace that with a compliant ACA plan, those rates are anywhere from 25 to 60 percent higher,” Marsh said. “A lot of small businesses that went through an ACA-compliant plan took some pretty good hits.”

Any small group that has not switched to a plan that complies with the Affordable Care Act will see similar increases if it makes the transition when it choose its plans next year.

“When they have to go to that … prepare and budget for it, because it’s coming,” Marsh said.

Employees will be able to keep pre-2010 “grandfathered” noncompliant plans as long as the plans do not change substantially. Ten carriers in the state elected to continue to offer those kinds of plans, while 11 carriers discontinued them.

The government will allow insurance companies to offer other plans that have been “grandmothered,” or plans that were offered this year that do not comply with the Affordable Care Act, through 2017.

Kendra Johnson, benefits consultant for Flood & Peterson Insurance Inc. in Fort Collins, has seen small-group plan cost increases of 20 percent to 25 percent. Noncompliant plans that have been “grandfathered” by businesses have risen just 2 percent to 11 percent.

“If you have an older demographic,” Johnson said, “somebody’s going to be paying between $800 and $1,200 just for the employee versus a 30-year-old employee, which would be still high, in the $300 range.”

Flood & Peterson has seen about half of its small-group clients move to Affordable Care Act-compliant plans, she said.

According to an analysis by the Colorado Division of Insurance, however, individual plan premiums will rise by an average 0.71 percent statewide and 2.54 percent for small-group plans statewide.

Premiums will rise by an average 5.26 percent in the Fort Collins area and 4.57 percent in the Greeley area, according to the state. Small-group plan premiums will rise 3.19 percent in the Fort Collins area and 3.22 percent in the Greeley area.

Fort Collins and Greeley premium increases exceeded rate hikes in Boulder and Denver. Boulder-area premium increases totaled 0.42 percent for individual plans and 2.6 percent for small-group plans. In the Denver area, premiums will rise 0.84 percent for individual plans and 2.77 percent for small-group plans.

Vince Plymell, spokesman for the state Division of Insurance, acknowledged the limitation of the average rate increases of plans offered statewide, which include private plans as well as ones on Connect for Health Colorado, the state’s health-insurance exchange.

“It really depends on the carrier someone’s looking at, it depends on geography, it depends on age,” Plymell said. “People could see increases.”

“Averages don’t tell the whole story,” he added.

Steve Lynn can be reached at 970-232-3147, 303-630-1968 or slynn@bizwestmedia.com. Follow him on Twitter at @SteveLynnBW.

FORT COLLINS – Colorado officials were pleased when the forecast for health-insurance costs registered well below 5 percent on average for policies in effect in 2015 in Northern Colorado and the Boulder Valley, but many small businesses will see much larger increases.

According to the state’s forecast, statewide health-care insurance premiums will rise an average of less than 3 percent for small businesses, but in reality, many plans come with higher price tags and double-digit premium increases, according to health-insurance brokers on the Front Range.

Bill Lindsay, interim chairman of the Colorado Commission on Affordable Health Care…

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