“40% Medical Plan renewal increase? Are they serious?”
If you are asking yourself this question, you are not alone! Many employers with 50-99 benefits eligible employees are experiencing very high renewal quotes from their current health insurance carriers for their 2016 renewals. Exude consultants and their client partners are asking why? The answer is not very clear, but from our view point the market looks like this:
- In the 1-50 benefit eligible employee market, the plans are largely set standard plans with age banded rates that are non-negotiable. They are changed annually or quarterly by the carriers, and there is really nothing employers can do.
- In the 100+ benefit eligible employee market, there is more transparency available. Groups are often able to get utilization and claim reports throughout the year to help them understand what the plan experience has been. This enables the Exude consultant and underwriters to look at the renewal with a fine tooth comb and negotiate better with carriers. In addition, groups of this size are able to look at alternative methods of funding such as self-insured or level funded plan designs. These options can often result in savings and negotiation power.
As a result, groups in the 50-99 benefits eligible marketplace find themselves in a black hole of sorts. Often, carriers will not release claim utilization and experience to this size group. This results in little to no knowledge of how a group’s plan is actually running. In addition, carriers provide very little information on how they rated the plan for renewal or arrived at an astronomical number such as 40%.
Coupled with this, in 2016, carriers are not really trying to buy business or grow business in this market. This is mainly because Cigna, Aetna, and United Healthcare are using the same underwriting tool, called GRX, that they purchased from Milliman. By using this one singular tool, there is no variety in the results. Unfortunately, this means that groups will likely be declined by all or receive a high cost quote from all.
Exude has met with the carriers and expressed our concerns for this market segment on behalf of all of our clients. We are hopeful that this underwriting methodology and lack of transparency will soon change. Barring any immediate changes in how the insurance carriers are choosing to rate this market segment, we will be working with our clients to continue to look into self-insurance and other alternative funding methods now available to smaller groups. We are committed to helping our partner clients continue to offer affordable coverage to their employees with all the available products in the marketplace.