Ouch! Open enrollment for health coverage draws near

10/13/2014

Patients sit in the waiting room at the St. John's Well Child and Family Center in Los Angeles, Calif. A forecast by benefits consultant Aon Hewitt finds that more workers at big U.S. companies will likely start paying a greater share of their doctor's bill because of continuing health insurance shifts. File photo: Patrick T. Fallon/Bloomberg

Open enrollment for employee health insurance is almost upon us. Prepare to be squeezed yet again. 

Higher premiums are on the way. Expect small hikes at big companies and big hikes at small ones. Many companies are also hiking deductibles and co-pays.

Woe to smokers and the chubby. More companies are imposing higher premiums for them. Some companies — especially smaller ones — are putting tighter limits on where an employee can get care.

In other words, the long-term trend of less coverage for more money continues on.

Employers have spent the past decade hiking deductibles, co-pays and co-insurance for workers. For instance, typical deductibles for single coverage have doubled since 2006, from $584 to $1,217 this year, according to the Kaiser Family Foundation.

In St. Louis, some insurers who cover small companies are excluding entire hospital groups from provider lists to keep costs down.

“In many instances, they don’t cover BJC (HealthCare),” says insurance broker Larry Poger, naming the region’s biggest hospital group.

Some small-group policies are adding co-pays on top of the deductible for outpatient surgery, something they never did before, says Karen Grasso, market leader for CBIZ, a benefits consultant in west St. Louis County.

You can’t blame the boss entirely. His costs are going up too.

Big employers are seeing their health benefit costs rise about 3.9 percent, according to a recent survey by Mercer, the national benefits consultant. Small employers are feeling real pain, with premiums up 10 percent to 20 percent and sometimes higher, according to St. Louis insurance brokers.

In response, employers are urging workers toward high-deductible plans, often accompanied by a tax-protected savings account for medical expenses. As costs rise, more small companies are being tempted to make high-deductible plans the only option.

Such plans offer premiums 8 to 12 percent lower than other plans. They are considered a good deal for workers who expect to stay healthy.

But they can heap big costs on workers who become seriously ill. The minimum deductible allowed for plans eligible for health savings accounts is $1,300 for an individual and $2,600 for a family, although many such plans have higher deductibles.

Their maximum out-of-pocket costs — the most a worker will have to pay per year on top of the premium — can be as high as $6,450 for an individual and $12,700 per family, although many plans have lesser maximums.

“Wellness pricing” is another trend, says J.D. Piro, who leads the law group at Aon Hewitt, the benefits consultant.

For years, employers encouraged workers to get healthy, equipping in-building gyms, adding weight loss clubs or offering pedometers to get people walking. It worked, but not very well.

Now they’re bringing out the stick, pushing employees to take health evaluations and charging more for those who smoke or won’t lose weight.

At BJC, the largest employer in St. Louis, smokers pay $25 extra per pay period. At some employers, the obese pay more.

About 60 percent of employers plan to start “gating” employees in the next three to five years, according to Aon Hewitt. That means employees will have to do something if they want more than minimal coverage, and that something is often a wellness evaluation.

Employers are cutting off part-timers, a trend that began several years ago. Wal-Mart last week said that people working under 30 hours will no longer get coverage. Target, Home Depot and others are also cutting coverage for part-timers. (The Affordable Care Act requires coverage for people working at least 30 hours at big companies.)

Expect to see more “cost transparency tools,” says Tim Simpson, a principal at Mercer benefits consulting firm in St. Louis. These are price and quality comparisons for hospitals and other providers. If your bum knee needs fixing, you can check the costs at various hospitals, along with things such as complication and infection rates.

That’s especially helpful to people with high-deductible plans, where cost is a big consideration.

More companies are going to “reference-based pricing.” It’s a way for companies to deal with the fact that some providers charge a lot more than others for the same service.

The company picks providers with reasonable prices. If the employees want to go elsewhere, the difference is on them.

“We’re not seeing many employers doing that yet, but many are talking about it,” says Simpson. An Aon Hewitt survey this year found 68 percent of employers planning to add it.

That might cause some anxiety for employees, who may think that St. Cheapo’s does a worse job than the hospital they’ve been using.

The reference-based system is becoming more common with lab work and X-rays, where quality doesn’t vary much.

The Affordable Care Act requires coverage of dependents up to age 26. Dependents mean children, but not spouses. Now companies are getting mean about mates.

Some are charging more for spouses, or dropping spouses who could get coverage at work. At BJC, it costs $50 extra per pay period to cover a working spouse who could get coverage elsewhere.

More companies are also moving to “defined contribution” benefits. The boss pays a set amount, and employees can apply it as they want among a choice of medical and dental plans, along with other options.

Make expensive choices and the worker pays the difference.

A new trend is to combine this approach with a “private health exchange.” Set up by an outside benefits company, it offers coverage at different prices, and sometimes from different insurance providers for health, vision and dental plans, and sometimes other options.

The broader choice helps ease the effect of a skimpier contribution from the employer.

Private exchanges are not common yet — only 3 percent of firms are using them this year. But Kaiser reports that 13 percent of firms this year were considering private exchanges, and 23 percent were thinking about using a defined contribution approach.

Some plans are offering a “teledoc” service. Rather than trotting off to the doctor for a minor complaint, participants can consult one face-to-face using computer or smartphone cameras.

Patients seem to like it better than the more common chat-with-a-nurse services. Prices run about $40 per doctor chat, but the patient’s share often runs $15 to $20.

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