HCW Benefits Blog

Contributor:
Mike Beck, Consultant
Hill, Chesson & Woody

Multiple national sources of data including surveys from PricewaterhouseCoopers and Segal Consulting are reporting 2011 healthcare trends to be similar to 2010, falling in the 9% – 11% range. This is very different than what employers are experiencing in their actual renewals throughout North Carolina. North Carolina carriers are using trends in the 10% - 13% range varying slightly by geographic area.  

Don’t be mislead by trends because renewal increases do not fall nicely within this 10% - 13% range. Increases are contingent upon claims experience and the distribution of those increases cover a very wide range. For 2011, we have seen increases from 5% to 45% for fully insured groups. There appears to be a pattern with many insurers requesting what seems to be larger than normal increases even when an employer’s loss ratio justifies a much lower increase. Some of the big impacts to renewals include conservative interpretations of impending Health Care reform legislation, increasingly unhealthy workforces, increases in medical trend and more expenditures related to high claimants.

Since renewals are contingent upon claims data, it is important that you have the capability to analyze your claims experience and push back when your insurer is asking for an unreasonable increase. Hill, Chesson, & Woody has successfully reduced requested increases by up to 50% in some situations. Many of these negotiations were conducted without using the marketplace as leverage, without changing carriers, and without changing plan designs.

Next to negotiating with leverage, now might be a terrific time to focus on strategies for controlling claims cost. This will allow you to get an early start on your negotiating position for next year’s renewal.