Business health insurance renewals roiled by change

It’s OK if you’re confused over health insurance renewal rates and plans. Too many moving parts, too many hands stirring the pot. 

Colorado residents and their employers can expect to pay more next year, but how much depends on a lot of factors. Those individuals and companies who renew on a calendar-year basis with new coverages starting in January are just now learning what to expect.

Reuters reported that on a national scale, employers will see the highest premium increases in a decade, perhaps 5.4% to 8.5%, and information from health insurance consulting firm Mercer indicated that two-thirds of employers won’t pass along all of that to employees because of concerns over inflationary impacts on workers in other areas of the economy. With replacement workers hard to find, retention is a primary motivator for employers, Mercer said.

Kendra Johnson, director of benefits solutions for the insurance broker Flood and Peterson in Northern Colorado, said the medical trend in NoCo is running 14%, which is higher than the Denver area. Insurance renewals for client companies are running 9% to 10%, and she agreed that many employers are absorbing those increases instead of passing them on to employees.

While those increases are high, they’re not the highest ever, but the percentages are applied to a big number.

Premiums “are the second or third biggest item on the P&L for many companies,” she said.

Debbie Ashford, North American chief actuary for consultant Aon, predicted an 8.5% rise in rates for 2024 nationwide. Aon noted that at least some share of the cost increases for the coming year is coming from the explosion in use of new drugs for weight loss. Whether it’s an approved weight loss drug such as Wegovy or the off-book use of diabetes drugs Ozempic or Mounjaro, some health plans include coverage, which drives up cost.

Johnson said that employers with self-funded plans can be hit hard by coverage of the diet drugs. “It can cost $1,100 to $1,200 per month to be on those drugs,” she said. On the flip side, however, “when people are losing weight, their comorbidities are going down, which could save money later on … that’s to be determined,” she said.

In Colorado, the marketplace has been somewhat embroiled by the pullout of some insurers or the forced closure of others.

The latest pullout was Friday Health Plans, which was forced into receivership in Texas after its rapid expansion. That caused it to pull out of Colorado; the Colorado Division of Insurance stopped enrolling people in Friday plans a couple of months ago.

Friday joins three others — Humana, Bright Health, and Oscar Health — that have stopped writing policies in the state. Those three announced their pullouts in 2022. Some, such as Humana, still offer prescription drug plans in the Medicare marketplace.

Insurers still writing policies, although not in all of Colorado’s 64 counties, are Anthem, Cigna, Denver Health, Kaiser and Rocky Mountain Health Plans.

About 203,000 Coloradans are enrolled in health insurance plans in the individual marketplace, with another 220,000 enrolled in the small group market that includes employers with fewer than 100 employees, according to the division of insurance. 

The Kaiser Family Foundation, which tracks health care trends, noted that there are 5.7 million residents of the state and only 7% are uninsured. Those not counted in the insurance division’s individual or small market plans are insured by larger employers or are in Medicare or Medicaid plans.

Some insurers have claimed that Colorado’s regulatory requirements, forced coverage additions and the Colorado Option competitive plan are driving up costs and causing insurers to pull out. Saskia Young, executive director of the Colorado Association to Health Plans, has been quoted as saying that fewer plans will be available because rates are affected by new coverage requirements, thus making it difficult to meet the 10% reduction targets required under the Colorado Option. The state’s insurance commissioner, Michael Conway, has denied that, saying that problems such as those faced by Friday “are national. The company’s aggressive growth in other states around the country got ahead of its financing.”

The Colorado Option, which kicks in Jan. 1, has two phases. In the first phase, health insurers, hospitals and prescription drug providers are required to work together to lower insurance premium costs by 10% per year in each of two years. If they can’t, then the state will implement a competitive plan of its own in phase two starting in 2025. 

Insurers are offering standardized plans in phase 1, and those plans are available in all 64 counties of the state, the insurance division said in materials that it has published. Information can be found at https://drive.google.com/file/d/1GW-7oBh4YDV8g0T4p_reEZO0YFBUq9yt/view?usp=sharing. Or, businesses or employees can go to Connect for Health Colorado and review “Options for Small Business Owners.”

For 2024, insurers handling 80% of small-business plans have been able to reduce premiums by 10% as required, according to the state. They’ve been helped by legislative action in the 2023 session that increased assistance to insurers, health care providers and consumers through the Colorado Insurance Guaranty Association, a reinsurance plan that provides protection from catastrophic claims.

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