Employers Can Expect Health Benefit Premiums to Rise

Overall claim costs will continue to increase by 7% to 10%.

Health care insurers report continued rising premiums into 2016 with claim trends exceeding general inflation for at least the next 18 months, according to the Spring Healthcare Trend Survey from Wells Fargo Insurance, part of Wells Fargo & Co.

The survey of more than 65 insurance companies nationwide found that, before any plan design changes, overall claim costs will continue to increase by 7% to 10%, indicating even higher premium rates in 2015 and 2016. Trends range from 7.2% for health maintenance organizations (HMO) to 9% for indemnity fee-for-service plans annually. Trends are 7.7% for point-of-service (POS) plans, 7.9% for preferred provider organizations (PPOs), and 8% for consumer-driven health plans. Projections for 2016 are slightly higher than trends from 2015.

Another challenge facing employers is the Patient Protection and Affordable Care Act (ACA) excise tax, or so-called Cadillac tax, on high-cost plans that will be effective in 2018, Wells Fargo notes. “The results of the survey indicate rising cost trends that will force companies into a delicate balancing act of providing competitive benefits while also managing costs effectively and complying with regulations,” says Dan Gowen, national practice leader with Wells Fargo Insurance’s employee benefits national practice.

Similar to the prior year, survey respondents agree the top‐three employer product innovations in 2015 will involve wellness initiatives, accountable care organizations (ACOs), and narrow- or tiered-provider network offerings.

The survey also found that the dental claim trend remains constant with past results and lower than medical due to a lack of cost‐shifting from public to private plans and improvements in dental technology.