Familiar hike: end of 'healthy-group' discount Jan. 1 spurs interest in self-funded insurance plans, other options.

AuthorMelani, Debra
Position[HEALTH CARE BENEFITS PRIMER]

It's hard enough telling a single mom who's been loyal to your company for years that you hiked her health-insurance contribution. It's even harder when you know the blow will push her over the financial edge. Factor in your place of work--a medical clinic--and the task becomes downright arduous.

So say the managers of Federal Healthcare, a family-practice clinic in Denver where relentless increases in health-insurance premiums are taking a toll on their staff. Rather than endure another punch that neither the clinic nor the employees could afford, the group changed companies this year, moving from their long-time carrier, Anthem Blue Cross and Blue Shield, to United Healthcare.

"Unfortunately, loyalty to an insurance company at this time in this market is not possible," said Bob Tulper, medical practice management consultant. "Your loyalty has to be with your company and what the company can afford."

But Tulper and his colleagues know: The move is merely a stop-gap.

Double-digit rate increases have plagued Colorado employers for years, continually outpacing inflation and the national average. The outlook for 2009 appears no better.

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With average premium increases of 10 percent to 12 percent predicted, many employers will be forced to continue their difficult health-insurance dance, shopping for new products, considering different companies, digging deeper into their budgets and shifting costs to employees already stressed by a poor economy.

And for some Colorado businesses, a legislative change that takes effect on Jan. I could deliver a double whammy, stacking as much as a 25 percent increase on top of their annual premium hike, brokers say.

"Unless the carriers adjust their rates, some of our clients could be looking at 40 percent-plus rate increases," said Denise Dougherty of Taggart Insurance in Boulder.

The change comes out of House Bill 1355 and prevents carriers from using employees' health status and claims experience to cut deals for small businesses with good records. Carriers can still use other factors in setting rates, such as age, tobacco use and geographic location of the company.

That "healthy-group" discount saved money for about 60 percent of small businesses, said Ed Regalado of the Gemini Group in Denver. Regalado predicts that as carriers continue to set their 2009 rates in the next couple of months, "You are going to hear a lot of people crying."

The intent of the bill was to create fairness in the group health-insurance industry and halt high premiums imposed on companies with chronically ill employees.

"Socially, that's the right thing to do," said Gary Meyers of MeyersDining in Boulder, who said he's neutral on the bill. "If your rates prior to...

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