Home > Employee Benefits > Mid-sized employer product and pricing trends amidst looming health care reform

Mid-sized employer product and pricing trends amidst looming health care reform

GSachsLast month I was honored to again be the featured speaker on Goldman Sachs Equity Research’s annual “industry expert conference call”, providing perspective on 2013 pricing and product trends for employee benefits programs at mid-sized companies.  I’ve participated in these calls for over 10 years, offering industry-specific insight to institutional investors in managed care equities about the health plan buying decisions of mid-sized employer groups (generally, those with 50 to 5,000 employees).

Key takeaways from this year’s discussion were the relatively stable pricing and service environment for 2013, and more so the growing employer focus on 2014 health reform implementation issues. Renewals for the 2013 calendar year cycle tracked about the same as last year (5%-7%) from an intensity and price competition level, resulting in general market share maintenance. One factor influencing the restraint of price increases has been carrier adaptation to health reform “MLR” (minimum loss ratio) rules. However, as the impact of these rules is absorbed into subsequent renewals that begin to reflect new health reform costs (particularly industry fee and reinsurance surcharges beginning in 2014), prices could begin to move higher.

We noted that most clients are unlikely to opt out of providing company-sponsored health plans given the approaching availability of state-level health care benefit “exchanges” on 1/1/2014. However, the affordability threshold and the mix of full-time versus part-time workers are two primary areas employers must consider regarding reform compliance. We are helping employers navigate these issues in several ways, including working with them to assess the potential impact of achieving compliance by extending coverage eligibility and/or projecting the penalty cost implications for taking a non-compliant posture. In particular industry verticals such as hospitality, retail, and education support services, the discussion increasingly includes employers exploring the possibility of managing their work hours down to less than 30 hours a week for certain employees in order to minimize healthcare reform implications.

This year’s call also touched on the likelihood for a potential acceleration in self-insuring among middle market employers, as well as the continued use of benefit buy-downs to avoid or reduce potential rate increases. Finally, we noted that carriers looking to compete in today’s market should embrace the latest technology to offer customers improved direct-to-consumer tools (i.e., mobile apps to check claims status, download forms, updated eligibility information, etc.).

WGA will continue to keep its finger on the pulse of health plan buying decisions our mid-sized clients make, as we strongly believe they are a leading indicator of American economic trends in this regard.

Click here to view the report.

About the Author

Ken Ambos is a Senior Vice President in WGA’s New York office. He is responsible for developing and managing Employee Benefits client relationships, and specializes in advising mid-sized employers about the direction of their employee benefit programs. In addition, he provides due diligence/consulting services for Private Equity firms to help them assess and manage employee benefits transactional risk.

212.784.5622 | kambos@wgains.com | Connect with Ken on LinkedIn

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