Colorado employers' health

Posted: 11/18/2014 04:10:11 PM MST

Updated: 11/18/2014 04:17:51 PM MST

Colorado employers face an 8 percent increase in the cost of renewing employee health insurance plans for 2015, the latest in a decade of steep increases, according to a survey released Tuesday.

If there's good news in the survey's findings, it's that the hike will be lower than the double-digit increases that have occurred nearly every year since at least 2004.

Much of the rise in costs is being shifted to employees through increased premiums - particularly for family coverage - and out-of-pocket expense limits, according to the annual survey by the Lockton Mountain West Benefit Group in Denver, a consultant on risk management, insurance and employee benefits.

Employers also are changing to carriers with less expensive options and reducing benefit levels through higher deductibles, co-payments and co-insurance, Lockton reported. Almost 80 percent of employers surveyed said employees will be expected to pay for some or all of the cost increases.

After making those changes, employers' average health insurance cost increase for 2015 was 5.3 percent, Lockton's survey said.

Employer-sponsored insurance covers 60 percent of Coloradans, roughly 3 million people, compared with the 148,000 people covered through the state health exchange, Connect for Health Colorado.

The Lockton survey found more than 92 percent of employers plan to continue their employer-based coverage next year.

The 14-year-old survey went to 602 Colorado employers selected for size, industry and visibility, and was designed to be representative. About 70 percent are in Denver. It was not meant to be a scientific sampling, Lockton officials say.

'Health costs in Colorado tend to increase faster than the national average. We don't know why. We're supposed to have one of the healthiest populations in the country and a lower median age. We need to get at what's driving costs here,' said Lockton spokesman Bill Lindsay.

Employers said rising prescription drug costs and hospital costs were the top contributors to increases in their medical plan expenses. Health-care reform, or the Affordable Care Act, was the third factor.

Rising health care costs are employers' biggest worry behind only an economic downturn, Lindsay said. Those costs continue to outpace increases in employee pay - the Lockton report cites an average merit pay increase of 2.7 percent.

The survey finds the ACA continues to worry employers. While 52 percent say they are only somewhat familiar with the health reforms and concept of state health exchanges, 62 percent say the ACA is a major concern for their business. That's down from 75 percent in 2014.

Employers report their main concerns are: burdensome reporting and regulatory requirements, fees and taxes associated with the law, frequent rule changes and uncertainty over costs of coverage.

Yet the act ultimately will drive down employers' health-benefit costs, said Adam Fox, director of strategic engagement for the Colorado Consumer Health Initiative, a backer of health reform.

'Perhaps the biggest impact of the ACA on large employer rates will be the reduction in uncompensated care as the uninsured population decreases,' Fox said. 'There will be less of a cost shift from uninsured patients to those with insurance coverage.'

Individuals offered employer-sponsored insurance can enroll through state exchanges rather than at work, but if they have an offer of 'affordable' coverage at the workplace, they will not be eligible for tax credits in the marketplace.

Employer coverage is termed affordable if the employee's contribution is less than 9.5 percent of his or her household income (for the employee's coverage only, not including the cost of adding family members).

Employers' coverage must also meet the 'minimum value' standard, defined as a plan with an actuarial value of at least 60 percent (equivalent to an ACA ' bronze' or lowest-cost plan).

If an employer's plan fails to meet one or both of these requirements, the employee and family may be eligible for subsidized coverage.

Electa Draper: 303-954-1276, edraper@denverpost.com or http://ift.tt/1cXejgB