Insurance bite could’ve been worse; County’s loss ratio means higher premiums

By Kristen Tribe | Published Saturday, July 19, 2014

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Wise County is facing an 11.3 percent hike in employee health insurance rates, effective Oct. 1, but the double-digit increase is not as high as originally anticipated.

In a special meeting last week, Brian Stephens with Stephens, Bastian and Cartwright told county commissioners that the initial renewal rate called for a 38.9 percent increase.

“It’s ugly,” he said. “But honestly, I’m surprised it wasn’t higher than that.”

He explained that the key factor in determining insurance rates is medical loss ratio – the dollar amount of claims spent versus the amount of premiums paid into the plan.

“They want you at 80 to 85 percent, and you’ve been at 120 percent,” he said. “That means 20 percent more premiums were paid out than in.”

In a comparison of Wise County’s statistics to other entities on an Aetna plan, every average was higher with the exception of length of hospital stay. Stephens said the categories that probably most greatly affected the rate increase were the higher than average number of surgeries and emergency room visits.

He recommended educating employees on which physicians’ offices are open at night or on weekends, to help cut down on trips to the ER.

“Your loss ratio has been bad for two years in a row,” he said. “You have a large number of large claims and so what we did was in anticipation of this, we asked Aetna, ‘If we don’t take it to market, what’s the best you can do?’

“As it turns out, we got an offer from them that blows me away,” he said. “I’ve never been more certain in my career that this is a deal that we shouldn’t pass up.”

Aetna put a package together that would allow the county to keep its current plan with only a 19.4 percent increase. This would mean an annual total cost increase of $816,612.

Stephens also presented commissioners with two other plans that cost even less but that are slightly different from the county’s current insurance plan.

Option 1 called for a 14 percent increase – an additional $590,448 annually – and option 2 reflected an 11.3 percent increase or $474,852 annually.

The increases affect those across the entire plan (employees and dependents), so a portion will be absorbed by employees. The county pays 100 percent of employees’ insurance costs and 65 percent of dependent coverage.

In their regular meeting Monday, commissioners decided to go with option 2. It also includes a 6.8 percent increase in dental insurance, but no increase for life insurance.

“It’s not fun, but it’s the nature of the beast in this day and time,” said County Judge Glenn Hughes.

The new health insurance plan includes a $1,000 deductible, where previously there was none, and a $2,500 out-of-pocket maximum. Specialist co-pay is $60.

The increased cost to employees per paycheck for health insurance is $13.12 for an “employee + 1” plan, and $18.92 for an “employee and family” plan.

At the meeting, Hughes asked Stephens how long it would take to “get back in the good graces” of the insurance company.

It’s a function of time and number of members, Stephens said.

“The more people in your group, the less time it takes,” he said. “Most carriers will put the most emphasis on the last 12 months.”

He said other considerations are the number and acuity of conditions in the group.

“Health conditions of the group is a major consideration of what next year’s claims are going to be,” he said. “You have a couple of large claims and some of them are ongoing. Large claims data is more than twice of what we’d like to see.”

Stephens did not recommend shopping around for insurance because the county’s medical loss ratio is so poor.

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