Health care premium could surge soon, report shows
When health care claim costs rise, premiums increase as well. A new Wells Fargo survey suggested claim costs could go up significantly through the rest of 2015 and into 2016.
The Employer Health Care Premium Cost Survey polled 65 insurance companies nationwide. The survey shows that a cost increase would put employers in a difficult position.
"What we've seen for the trend from this year into next year is we think claim costs are ticking back up potentially back into the double-digit range, you know the 9, 10, 11 percent range," said Michael Mascolo, national practice leader, North Region Employee Benefits for Wells Fargo Insurance Services USA, Inc.
Since 2008, Wells Fargo has conducted this study twice a year. The latest survey also showed a continued increase in prescription drug cost trends as a result of price hikes in generic drugs and the increased use of specialty drugs.
"Depending on what your company does or what your business is, your company can't raise their prices 10 percent a year for the products they sell and if they have some expenses that are going up at that rate obviously something's got to give somewhere," Mascolo explained.
Changes in prices for the same services, whether deflated or inflated, also factor into claim cost increases according to the survey. Another influence will take effect in 2018 with the so-called Cadillac tax which was designed to encourage businesses to offer cost-effective plans and get workers to share more of the cost.
"There are employers that are taking a more aggressive approach -- if I could use that word -- where they're really not giving employees a lot of choice. They're just saying, 'Look we can't afford those richer plans and we're going to move everyone into these less expensive, higher deductible types of programs,'" Mascolo said.
The survey also found that dental claim trends remain constant and lower than medical claims because of a lack of cost-shifting from public to private plans and improvements in dental technology.
"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," Dan Gowen, the national practice leader with Wells Fargo Insurance's Employee Benefits National Practice said in an emailed statement.