State Residents Pay Among Highest Insurance Rates Nationally

WINDSOR — The average family living in Connecticut pays $1,016 for health insurance premiums — with the Northeast remaining the highest at 13 percent above the national average. According to a recent survey, over the past year, average health insurance premiums have increased 8.5 percent.

While premium increases in the Northeast mirror the national average, annual premiums start out higher.

Lindberg & Ripple, Inc (LRI), a leading financial and employee benefit services company, recently participated in the second annual national survey conducted by United Benefits Advisors (UBA), an alliance of 141 of the nation’s premier independent benefit advisory firms. Among its major findings, the Northeast stood out due to its richer level of benefits, according to the 2006 UBA Health Plan Survey.

“The continuing prevalence of lower health care deductibles and co-pays, plus increasing cost of care, are driving the rise in premiums,” said William Lindberg, executive vice president of LRI. “In addition, consumer utilization of services is a major factor in rising health care costs. While the annual trend was slightly lower than last year, we still expect to see premium increases average 12 percent in 2007.”

Demographically, the Northeast region is a tight population with a high concentration of people with close accessibility to hospitals.

“Patients have more opportunity to seek quick medical attention, without the inconvenience of traveling long distances,” added Mr Lindberg.

Among the survey’s findings, the Northeast has a dramatically higher prevalence of HMO and $0 deductible PPO plans, including 40 percent of employers offering the HMO plan, versus the national average of 24 percent. Sixty percent of the region’s PPO plans have no in-network deductible versus the national average of 16 percent.

“The Northeast continues to be slow in its movement from standard managed care plans,” said Robert Lindberg, president of LRI. “While we have seen more adoption of consumer directed plan options, plan sponsors are still carrying a higher percentage of plan costs.

“While we have seen an increase in the number of employers offering Consumer Directed Health Plans [CDHP] nationwide with 5.8 percent of employers offering these types of plans, the Northeast lags behind with only 3.5 percent offering CDHP designs.”

With responses from 13,663 health plans sponsored by 9,603 employers nationwide who employ 1.52 million people with approximately 3.52 million total lives, the 2006 UBA Health Plan Survey is the nation’s largest and most comprehensive survey of plan design and plan costs.

“The unprecedented number of respondents allows the report to define benchmarks for a greater number of specific industries, regions, and employee size categories than have been available previously,” said David LoCascio, UBA’s co-founder. “The results will be of significant value to employers in evaluating the effectiveness of their current plans and to knowledgably make future adjustments to keep their benefits both competitive and cost-effective.”

The survey report provides vital benchmark statistics on hundreds of health plan factors, including detailed enrollment, plan design, plan cost, employee premium cost-sharing, prescription drug, retiree plan, and flexible spending account norms.

 

Among Survey Findings

éThe average annual health plan cost per employee is $6,629 (medical/Rx coverage), with an average employee cost of $2,031 and an average employer cost per employee of $4,592.

éAverage premiums for all plans were $331 for single coverage and $817 for family (a weighted average of all nonsingle coverages).

é32.3 percent of all plans required no employee contributions and 8.3 percent required no family contributions. Of plans requiring contributions, employees contributed an average of 26.9 percent of premium or $88 for single coverage and 45.3 percent or $361 for family coverage.

éAverage premiums increased 8.6 percent for all plans (after any plan adjustments) versus 9.6 percent last year, with Consumer Driven Plans having the lowest increases at 5.7 percent.

éConsumer Driven Plans (plans with an HRA or HSA) are now offered by 5.8 percent of employers versus 2.6 percent last year, with 3.4 percent of all covered employees now enrolled in such plans (also up from 1.9 percent last year).

éThe average employer contribution to an HRA was $1,033 for single and $1,965 for family, while average employer contributions to an HSA were $938 single and $1,533 family.

éThe overwhelming majority of the increased adoption of Consumer Driven Plans have come from employers with fewer than 1,000 employees, with the highest subsegment being employers with less than 100 employees.

 “With employer health plan information reported for over 2,700 cities from virtually every state in the country, differences in plan design and plan costs between various regions and industry groups become apparent,” said Mr LoCascio. “This unique level of additional information provides important factors in determining not just what is happening with health plan costs, but why it’s happening.”

For example, the survey data confirm that the often reported health plan premium cost difference for plans in the Northeast (13 percent above the national average) is largely attributable to those plans having richer benefits than any other region of the country. Specifically, 74.6 percent of plans in the Northeast have no single deductible and an amazing 83.3 percent have no in-network coinsurance, versus roughly 25 percent for plans in other regions.

 

Other important findings

éThe median single PPO deductible is now $500, while in-network and out-of-network coinsurance is 80 percent and 60 percent respectively.

éHMOs and CDHPs have approximately 10 percent lower annual costs per employee than the average plan, while POS and FFS plans have nearly 9 percent and 21 percent higher annual costs per employee than the average plan, respectively.

é48.2 percent of covered employees also elect dependent coverage, with the highest percentage (52.5 percent) being covered by CDHPs.

é4.4 percent of all employers now offer comprehensive, noninsurance company-based wellness programs, mirroring the trend toward consumer empowerment in health care.

é75.1 percent of all prescription drug plans utilize three co-pays, with median co-pays of $10/$25/$45, and 96.2 percent of plans utilize a mail-order program.

éWhile 18.2 percent of plans provide coverage for same-sex domestic partners, regional differences are pronounced (57.2 percent of plans in the West, 23.4 percent in the Northeast, and an average of 1.7 percent in the rest of the country).

éPlan premiums increased approximately 1.2 percent more for employers with fewer than 50 employees than for all other employers.

“The intent of the survey is to provide not only large employers with effective plan benchmarks, but to also provide the 99.3 percent of employer plan sponsors who have fewer than 1,000 employees with data that is critical in managing their programs effectively,” said Mr LoCascio. “Also, with the rapidly increasing number of employers having operations in more than one location, a genuinely national survey of this previously unavailable size and scope is the most effective way to deliver that information.”