Below are my responses to questions posed in a media inquiry from the Assistant Editor at Bank Rate Insurance:
1.) Question: Why are small business health insurance premiums continuing to rise?
Answer: There are three primary reasons why health insurance premiums are continuing to rise after the PPACA. They are as follows:
A.) My Blue Cross Group clients have received policy renewal rate increases since the passage of the PPACA of up to 46% for the first time in 17 years. See just a few of them here. Their prior premium increases were no where near this amount. This is not isolated to Blue Cross either. These premium increases are happening in many markets across the United States in both the Individual AND Group health insurance markets.
These increases are due in large part to the fact that MULTIPLE new “Preventative Care” mandates were imposed upon all “non-grandfathered” health insurance plans as of 9/23/2010 under the PPACA (Patient Protection & Affordable Care Act). A “Non-grandfathered” health insurance plan is a plan that was purchased after the PPACA (a.k.a “Obamacare”) was signed in to law on March 23, 2010. Keep in mind, these were ALL mandated to be covered no later than 1/1/2011 WITHOUT a co pay or a DEDUCTIBLE (a.k.a. “free”). The entire list is as follows:
Covered Preventive Services for Adults:
Abdominal Aortic Aneurysm one-time screening for men of specified ages who have ever smoked
Alcohol Misuse screening and counseling
Aspirin use for men and women of certain ages
Blood Pressure screening for all adults
Cholesterol screening for adults of certain ages or at higher risk
Colorectal Cancer screening for adults over 50
Depression screening for adults
Type 2 Diabetes screening for adults with high blood pressure
Diet counseling for adults at higher risk for chronic disease
HIV screening for all adults at higher risk
Immunizationvaccines for adults–doses, recommended ages, and recommended populations vary:
Measles, Mumps, Rubella
Tetanus, Diphtheria, Pertussis
Obesity screening and counseling for all adults
Sexually Transmitted Infection (STI) prevention counseling for adults at higher risk
Tobacco Use screening for all adults and cessation interventions for tobacco users
Syphilis screening for all adults at higher risk
Covered Preventive Services for Women, Including Pregnant Women:
Anemia screening on a routine basis for pregnant women
BRCA counseling about genetic testing for women at higher risk
Breast Cancer Mammography screenings every 1 to 2 years for women over 40
Breast Cancer Chemoprevention counseling for women at higher risk
Breast Feeding interventions to support and promote breast feeding
Cervical Cancer screening for sexually active women
Chlamydia Infection screening for younger women and other women at higher risk
Folic Acid supplements for women who may become pregnant
Gonorrhea screening for all women at higher risk
Hepatitis B screening for pregnant women at their first prenatal visit
Osteoporosis screening for women over age 60 depending on risk factors
Rh Incompatibility screening for all pregnant women and follow-up testing for women at higher risk
Tobacco Use screening and interventions for all women, and expanded counseling for pregnant tobacco users
Syphilis screening for all pregnant women or other women at increased risk
Covered Preventive Services for Children:
Alcohol and Drug Use assessments for adolescents
Autism screening for children at 18 and 24 months
Behavioral assessments for children of all ages
Cervical Dysplasia screening for sexually active females
Congenital Hypothyroidism screening for newborns
Developmental screening for children under age 3, and surveillance throughout childhood
Dyslipidemia screening for children at higher risk of lipid disorders
Fluoride Chemoprevention supplements for children without fluoride in their water source
Gonorrhea preventive medication for the eyes of all newborns
Hearing screening for all newborns
Height, Weight and Body Mass Index measurements for children
Hematocrit or Hemoglobin screening for children
Hemoglobinopathies or sickle cell screening for newborns
HIV screening for adolescents at higher risk
Immunizationvaccines for children from birth to age 18 —doses, recommended ages, and recommended populations vary:
Diphtheria, Tetanus, Pertussis
Haemophilus influenzae type b
Measles, Mumps, Rubella
Iron supplements for children ages 6 to 12 months at risk for anemia
Lead screening for children at risk of exposure
Medical History for all children throughout development
Obesity screening and counseling
Oral Health risk assessment for young children
Phenylketonuria (PKU) screening for this genetic disorder in newborns
Sexually Transmitted Infection (STI) prevention counseling for adolescents at higher risk
Tuberculin testing for children at higher risk of tuberculosis
Visionscreening for all children
Dependent coverage extended to adult children to age 26.
Prohibition of pre-existing exclusions for individuals under 19.
Compliance with specific internal claims appeals processes and external review requirements.
B.) Now for the policy “design” Mandates. Blue Cross outlines those here:
C.) Now we come to reason number three. The onerous new Medical Loss Ratios or “MLR’s”. This is why health insurance premiums are increasing on “Non-Grand-Fathered” health insurance plans as well. For full details on these I refer you to the following link from the Heritage Institute. http://www.heritage.org/Research/Reports/2010/01/Squeezing-out-Private-Health-Plans
The rapid implementation of the new Medical Loss Ratios have led to more than 20 health insurance carriers closing their doors or refusing to sell health insurance again. This has left thousands of American’s either uninsured or without the plan they had prior to the passage of the PPACA. Here’s sample letter that many of my clients received when Guarantee Trust Life insurance company ceased providing health insurance to my clients around the country. This is exactly the opposite of what President Obama promised when he said in his speech to the AMA on June 15, 2009 “If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what.” Find out the names of the carriers that have left the industry since the passage of the PPACA as well as all the other damage done to the health insurance industry since the passage of the PPACA by reading the new study completed by the Galen Institute on December 1, 2011 entitled “A Radical Restructuring of Health Insurance.”
World Insurance company in Omaha, Nebraska and it’s subsidiary American Republic insurance company is the latest carrier to succumb to the PPACA’s onerous Medical Loss Ratio requirement. Read the story here. Both companies will be purchased by Celtic Insurance company of Chicago Illinois. This the THIRTEENTH company to pull out of some portion of Iowa’s health insurance business since June 2010. This again, is all due to the onerous MLR’s (Medical Loss Ratios) implemented on 9/23/2010 under Obamacare.
Other companies that have either closed their doors entirely or stopped selling health insurance since Obamacare was signed into law are as follows:
Other carriers are slowly withdrawing State by State. Page 7 of this white paper dated September 6, 2011 from the North Carolina Department of Insurance details exactly why the majority of all health insurance carriers that offered health insurance in their State have already exited and why even more are considering doing so shortly.
Historical precedent proves that forcing mandate after mandate and new regulation after regulation on to the health insurance industry does nothing but increase costs. In 1979 there were 252 mandates forced upon the health insurance industry, by 2007 there were nearly 1900. With the implementation of the PPACA we have tipped the scales at nearly 2,262 mandates. Keep piling them on and costs will continue to rise.
2. Question: Despite the potential price hike, 69% of business owners do not plan on re-bidding their health insurance out. Why do you think this is?
Answer: There are two reasons why many business owners are not planning on re-bidding their health insurance out. They are as follows:
A.) They do not want to be forced to add on all of the aforementioned ‘free’ Preventative Care mandated benefits because they know, as those that pay the premiums for these plans, that these benefits are NOT ‘free’. They know that NOTHING is ‘free” and that adding all of the aforementioned newly mandated ‘Preventative Care’ benefits will do nothing but INCREASE their health insurance costs.
B.) Those business owners who are men and women of faith are refusing to comply with the aforementioned HHS mandate requiring them to provide both Contraceptive and Abortifacient drugs to their employees. They know that this is a fundamental violation of our 1st amendment rights. And they, like the more than 500 leading academic, religious leaders and health care professionals, across the ideological spectrum are REFUSING to comply with this unconstitutional HHS mandate. In fact, across the country, there are 58 separate plaintiffs, and 24 separate legal cases already filed against the Obama administration’s Health & Human Services department. To see them all click here. By ‘re bidding their existing health insurance plan out’ they would be lose their ‘grand-fathered health plan status’ as defined by the PPACA.
3. Question: Do you have any tips for small business owners who are looking for cheaper health insurance, or who are dissatisfied with their current insurance plans?
Answer: Yes, explore the many advantages of Consumer Driven Tax Qualified health insurance plans. One of the most common is an HSA (Health Savings Account) qualified HDHP (High Deductible Health Plan). To learn more about the many unique advantages of HSA qualified HDHP’s please click here.
It is my opinion that Consumer Driven Tax Qualified Health Insurance plans are the most intelligent and lowest priced way (by far) to insure anyone. Most especially families and the self employed. When H.S.A. qualified HDHPs were first introduced by Senator Bill Archer (R) of Texas in the 1990’s they were called M.S.A.’s (Medical Savings Accounts) and at that time there was a considerable difference between the premium required for the M.S.A. qualified H.D.H.P. and a Traditional (non HSA qualified) health insurance plan which normally includes more “first dollar benefits”. A “first dollar” benefit is defined as ” a benefit you receive without paying your calendar year health plan deductible first (i.e. outpatient doctor office visits and outpatient prescription drugs).
In the late 1990’s and early in to the year 2000 a family of four would spend about $200 less monthly for an M.S.A. qualified H.D.H.P. compared to a Traditional plan purchase. So at that time, the purchase of an M.S.A. qualified H.D.H.P made good fiscal sense. Instead of giving the extra $2,400 to the insurance company each year for the privilege of the aforementioned “first dollar benefits”, an insured could instead deposit those extra dollars into a 100% tax deductible, tax deferred, interest bearing account and roll it over each year if it was not used to pay for IRS qualified medical expenses thereby building a separate “Medical IRA”. Now more commonly referred to as an HSA (Health Savings Account).
If such IRS qualified expenses did occur throughout the course of the year, the insured can spend their HSA funds on these expenses and these expenses also become a 100% tax deduction. So unlike a Traditional IRA there is no penalty for early withdrawal providing the HSA funds are used to pay for IRS allowable medical expenses. Many of these HSA qualified expenses are medical procedures and treatments that would never be covered by a health insurance plan. For a complete list of IRS approved HSA qualified medical expense visit: http://www.irs.gov/publications/p502/index.html
The considerable difference in premium caused the purchase ratio of M.S.A.’s over Traditional health insurance plans to skyrocket. As a matter of fact, in the late 1990’s we sold almost 90% M.S.A. qualified plans. Today, the percentage of H.S.A.’s qualified HDHP’s that we sell is still a huge portion of our block of business. This is primarily because the premium gap between the cost to purchase a Traditional health insurance plan and an HSA qualified HDHP has widened even more and the tax advantages to owning an HSA qualified HDHP became even more lucrative under the former Bush administration. And they are equally lucrative today.
Today, the IRS allows you to open the aforementioned Health Savings Account (a.k.a. Medical IRA) if you choose to do so. This is an option. It is however a very good option to select because so long as you have an HSA qualified plan, the IRS allows you to deposit up to $6,150 (each year) in to a 100% tax deductible, tax deferred, interest bearing Medical IRA. It behooves policy holders to deposit money in to their HSA account for the following reasons:
a.) All funds deposited in to your Medical IRA (HSA) are 100% tax deductible from your adjusted gross income. This means less taxes and more money for your retirement.
b.) Unlike any other IRA, a Medical IRA (HSA) allows you to withdraw funds at any time with no penalty
for “qualified medical expenses”. To find a list of IRS “qualified medical expenses” click the IRS link below: http://www.irs.gov/publications/p502/index.html Most importantly, when you withdraw your HSA funds to pay for any of the qualified medical expenses on that list, those expenses themselves become 100% tax deductible.
c.) Here’s the key point. If you have just ONE year without any significant claims and you fully fund your Medical IRA, then if the worse case scenario occurs, you will have those funds available and be able to withdraw them with no penalty and use that money to pay your calendar yeardeductible. In year two with no large claims, you will be that much farther ahead of the risk management game. In fact, no other kind of Health Insurance actually lowers your risk the longer you own it.
I say this because, there are few other IRAs that you can withdraw from at any time with no penalties. This being the case, the longer you fund a Medical IRA (HSA), the lower your risk becomes by owning an HSA qualified Health Insurance plan. Simply due to the fact that each year you fund the IRA, the more money will be there if the worse case scenario occurs. This is so because each year your remaining balance rolls over and continues to earn tax deferred interest. If you never need to withdraw it for medical expenses you can use it for retirement at the age of 65. To help you further understand how Medical IRA (HSA qualified) HDHP’s (High Deductible Health Plans) work please watch the easy to understand videos in the right hand column of the following HSA Center site: http://www.hsacenter.com/
Another important difference between Traditional (non HSA qualified plans) is the design of the deductible. With HSA qualified HDHP’s there is only one “aggregate” deductible for the entire family. Once that “common family” deductible has been satisfied, there will be no other out of pocket expenses for in network covered charges for any other family member for the rest of that calendar year. This is in stark contrast to Traditional health insurance plans which typically require each of two or three family members to separately satisfy their own calendar year deductible if they end up in the hospital.
4. Question: Do you have any statistics available on how much the average small business pays for group health insurance, and how that compares to previous years?
Answer: Yes, Aon Hewitt recently completed their “2011 Health Insurance Trend Driver Survey“. The majority of surveyed responses in their study reported core health care trends between 7.0% and 10.0% during the past three years. The average core rates, weighted by covered membership, were 8.3%, 9.0%, and 7.9% for years 2008, 2009, and 2010, respectively.
These study results reflect my real world examples. My group health insurance clients during those years also received nearly the same premium increases on their health insurance plans. That said, not once in 17 years have I seen group health insurance premium increases of 31% to 45%. See copies of them here. Those kinds of onerous premium hikes began happening to my clients shortly after the implementation of all of the new PPACA mandated “free” Preventative Care benefits, the onerous MLR’s (Medical Loss Ratios) and the prohibition on pre-existing condition exclusions for children under the age of 19.
It’s important to note as well that although sick children under the age of 19 are now mandated by the PPACA to be issued health insurance without regard to pre-existing conditions on individual health plans. The PPACA is not stopping the health insurance underwriters from increasing the premium by 500% or more when a sick child is added to a parent’s policy. When such an increase is handed down to one of my clients I simply refer that parent to our state high risk health insurance pool which existed for many years before the PPACA and covers these pre-existing conditions for a very reasonable premium. In fact, most states had either high risk health insurance pools or ‘guaranteed issue individual mandates’ (Ohio) for many, many years before the PPACA.
For the truth about where ‘pre-existing condition’ clauses came from and the state based solutions that existed for many years before the PPACA for individuals with pre-existing conditions visit: www.TruthAboutPreExistingConditions.com