Health-plan costs for Spokane-area businesses are rising this year mostly in the single-digit to low double-digit percentage range, which is slightly lower than the rate hikes businesses experienced in 2005.


Representatives of several of the Inland Northwests largest health plans say rates are climbing at lower levels than they expected, primarily because their costs were lower than anticipated last year. While perennial issues such as an aging population and more advanced medical technology drive up health-care costs each year, they say that other factors, such as fewer claims made by employees, cut into health plan costs and translated into smaller premium increases.


The rate hikes this year are lower primarily because businesses and health plans have been getting better at keeping their costs down, says Mark Newbold, a consultant with Spokane-based Moloney ONeill Benefits Inc., which brokers plans for about 750 employer-employee groups in the Inland Northwest. He says hes seeing average increases of 12 percent to 15 percent, compared with hikes from 15 percent to 20 percent in 2004.


The smaller increases are a positive thing, relative to what theyve been in the past, Newbold says. We all hope in the industry that this is the sign of better things to come, but theres no guarantee that this is the start of a trend.


In terms of efforts by businesses to keep premiums manageable, Newbold says many groups here are changing the designs of their benefits to packages that require more out-of-pocket costs for employees. For instance, employees are paying higher deductibles for health benefits and higher co-pays for doctors visits and medicines, he says.


In the Washington state market, employers expect total health benefit costs for active employees to rise 6.8 percent this year, down from 8.3 percent last year, according to the National Survey of Employer-Sponsored Health Plans, conducted by Mercer Health & Benefits LLC.


In the Western U.S., total health benefit costs are expected to increase by 6.2 percent this year, down from 7.6 percent in 2005. Health benefit costs nationally, however, are expected to rise by 6.7 percent, up from 6.1 percent last year.


While health insurance rates have been rising every year, most businesses here havent opted to terminate health benefits, Newbold says. He expects employers will continue to offer benefits, although theyve been talking more to employees about whether they prefer compensation in the form of wage increases.


Most groups are committed to providing insurance to employees, which, given the per capita income in Spokane, is to their credit, he says.


Newbold also is seeing increased interest among employers here in health savings accounts and health reimbursement accounts for employees. Those plans allow employees to pay for health-care expenses and save for future expenses on a tax-free basis. An employer buys a higher-deductible health plan, and both the employer and the employee put the savings into an account for employees to use for health-care expenses up to the amount of the large deductible.


Another reason that the rate hikes arent as steep as they have been in the past is that health insurance plans paid out less in claims than they received in premium payments last year and have been able to add to their reserves, Newbold says. Health plans also are managing claims better by emphasizing preventive care for diseases.


The Washington Legislature could help keep rates down by not adding more mandated coverages to insurance plans, he asserts. When insurers are required to include more types of coverage, they have to increase premium costs. Instead, he contends, groups should be able to choose which benefits they want.


Despite the mandated coverage laws in Washington, Newbold says the rate hikes here are fairly consistent with those in other states in which Moloney ONeill Benefits does business, such as Tennessee, Illinois, and Arkansas.


Premera Blue Cross


Premera Blue Cross, which has about 280,000 members in Eastern Washington, says its percentage increases this year are in the low single-digits for small employers and in the single digits for large businesses. That compares with typical jumps of about 8 percent for small employers and the high single-digit and low double-digit percentage range for large employers last year, says Scott Forslund, Premeras Seattle-based spokesman. Its important to remember, however, that rates for small businesses can change depending on factors such as the age range of employees, and rates for large businesses are based largely on experience ratings, he says.


This is good news in the short run, but the deep-seated drivers of health-care cost increases arent going away, Forslund says. So theres going to be continued upward pressure on health-care insurance.


The national health-care market has endured more than five years of double-digit increases in medical care costs, which are driven by increases in medical care prices and drug prices, as well as more expensive technology being used, he says. In addition, consumers have been using health care more. In the past year, though, the increased use of health care has moderated somewhat, he says.


Premera is trying to manage health plan costs by collaborating with physicians on initiatives such as quality score cards, he says. The company also is working to ensure people are getting right care at the right time by providing a 24-hour nurse help line and creating new disease-management programs for people who have chronic medical conditions, he says.


Group Health


Group Health Cooperative, which has nearly 130,000 members in Eastern Washington, is raising its rates an average of about 9 percent for small employers and about 14 percent for large employers. Premiums for large groups vary widely, though, because rates are based on their experience ratings, says Maureen McLaughlin, Group Healths Seattle-based executive vice president of health plan coverage. In 2005, premiums increased by a similar percentage for large businesses and by about 12 percent for small employers, McLaughlin says.


She says experience ratings overall were better than expected last year. Employers frequently are choosing high-deductible health plans and are raising office visit co-pays, because when employees have to pay more for their health plans and visits to doctors, they tend to use health care less.


Group Health also made some internal changes in 2005 to cut costs, including cutting 100 jobs, consolidating departments, and updating technology. It also rolled out an online clinical information system in Eastern Washington last fall that features electronic patient records and Web-based drug refills, she says.


This year, Group Health is offering health savings account and health reimbursement account options. The primary difference between the two is that employees own health savings accounts, while employers own health reimbursement accounts, she says.


Asuris Northwest Health


Asuris Northwest Health, which has 30,000 members in Eastern Washington, says its boosting its rates, on average, by percentages in the low single-digits for small businesses and in the low teens for large employers. Last year, it raised rates by just under 10 percent for small employers and in the high teens for large employers, says Jodi Coffey, a Seattle-based spokeswoman for Asuris.


Coffey says claims have been lower than expected, and that employers more frequently have been choosing plans in which employees pay a coinsurance premium instead of office visit co-pays.


Employers over the past few years have been putting the cost of going to the doctor on employees, she says.


Asuris has seen increased interest in its health savings account, and has introduced several new products that help employers manage premium costs, she says. For instance, its ForeFront product, which is designed for small employers, costs up to 20 percent less than the companys other plans and involves employee coinsurance.