Premiums Will Increase.
Broadly speaking, look for premiums to increase in 2016. According to the Spring Healthcare Trend Survey from Wells Fargo Insurance, 65 health insurers surveyed indicated that overall claim costs increased by 7 to 10 percent, before any changes in plan designs. Those increases and more are eventually going to show up in insurance premiums going into 2016. Indemnity-type plans seem to be showing somewhat higher claims increases than HMOs, but all types of plans are showing increases from between 7 and 10 percent.
Also contributing to claims increases: Hikes in generic drug prices, as well as the increased use of expensive specialty biotechnology drugs, including Abilify and Crestor.
The study aside, though, we’ve already seen some major carriers with big market shares in individual states file for some major premium increases:
- Anthem Blue Cross has released renewal increases from 15% to as much as 100% for all of its products.
- CareFirst Blue Cross of Maryland requested a 34 percent premium increase for its PPO plan, and another 26.7 percent hike in its HMO.
- Wellmark Blue Cross of Iowa filed for a 43 percent premium increase, while Coventry asked for an 18 percent hike for its Iowa members.
- Moda asked to raise premiums on its Oregon beneficiaries by 25.6 percent, and Lifewise applied for a 38.5 percent increase.
- Highmark has already asked for increase of 13.5 percent to 39.65 percent in Pennsylvania, and Geisinger HMO has asked to hike their premiums by 40.6 percent to 58.4 percent.
- Humana’s Georgia plan is asking for premium increases of 14.8 to 19.44 percent.
In some cases companies are totally redesigning their plans, so there is no real direct comparison between this years’ and next years’ pricing structures.
Companies Will Scale Back “Cadillac” Plans.
Analysts also expect to see a series of changes to so-called “Cadillac plans,” in an effort to avoid a 40 percent surcharge on some of these plans beginning in 2018. According to the Wells Fargo survey, some 38 percent of large employer plans will be impacted, either by the tax, or by changes to these plans in the effort to avoid the tax.
The Wells Fargo survey also found that insurers expect to see continued expansion of the role of employee wellness initiatives of various stripes, and continuing pressure to narrow networks of providers.
We will also likely see some changes to network designs and an increase in the number of so-called “tiered” networks. These networks retain a narrow-network base, but also provide some more limited coverage for certain providers who are “outside the plan.” These systems seek to encourage plan participants to use in-network providers, but also allowing for some flexibility to use other providers.
The Affordable Care Act Will Not Be Repealed.
Despite the lack of popularity among businesses, the ACA is not likely to be repealed. 2016 poses to be an interested year because of the elections. But even if a Republican were to be elected into office, it is unlikely that a complete repeal of the ACA is able to garner enough votes. A revision of the ACA is actually more likely regardless of who is elected President and what the House and Senate look like.
Alan Wang is the President of UBF and serves as the lead consultant. He has delivered the UBF solution set throughout the world and is highly regarded for his areas of expertise. You can follow him on Twitter @UBFconsulting.