County concerned about employee health care increases

Wednesday, April 27, 2016

Insurance broker: Affordable Care Act not affordable at all

The cost of health care is a concern to every American, and with that comes the process how to obtain insurance and navigate Obamacare, also known as The Affordable Care Act (ACA).

A total of 71 Barry County employees have 100 percent of their health insurance covered by the county, but Cherry Warren, presiding county commissioner, is concerned that health care costs might increase phenomenally in the foreseeable future.

"We've looked at what other counties have done, and some others have had a 40-50 percent increase this year," he said. "I think our health costs will go up in large numbers in the next two or three years. If we pay 100 percent of their insurance, that has a pretty big effect on the county's operations. Our sales tax has been positive and increasing, but as I say, we don't have to worry about the good times, it's when we get a setback and our costs go up -- those are the kinds of things we try to look at and worry about."

One reason he suspects for increases are illnesses.

"You get an open heart surgery, and it's pretty easy to spend a million," he said.

Another reason is Obamacare.

"The Affordable Care Act has been a misnomer because there's really nothing affordable about it," said Broker Mark Smith of Willis Insurance Agency, Cassville.

Smith said he handles individual and senior markets versus groups, but is nonetheless aware of the current crisis in the insurance industry.

"On the individual side, healthy people did not enter into the marketplace to get insurance as expected," he said. "They paid the penalty on their taxes. The government was counting on a group of young, healthy people who did not have insurance to enter into the marketplace to offset the people who were already in the system or were going to apply for insurance that had preexisting conditions prior to the ACA that were not covered. The government added a penalty to increase incrementally each year to encourage people to become insurable."

Smith said the government promised to reimburse insurance companies who were losing money, then a bill was introduced stating that insurance companies would have to suffer their losses. He suspects what happened in the individual market may have a trickle-down effect on groups.

"I really don't know, because a group has their rates pooled together," he said.

Lawrence County Presiding Commissioner Sam Goodman said they've been able to head off increases by renewing early.

"But after this year, I don't know if that's going to be a possibility," he said. "It's not the bargain people were hoping for. The savings aren't there at this point. Talking to our provider, [the outlook is] not too rosy. You have to make the difference somewhere, so there may be areas where there won't be raises, or have to be cuts."

Goodman said the county has seen big spikes in rates after employee illnesses, but the fact that their employees are younger as a whole, helps.

"The ones we have are probably in the upper-to-middle-age group," he said.

Goodman believes elections may play a part in rates, too.

"This is an election year," he said. "Probably right after the election [will be an increase], would be my guess."

Michelle Miller, lead account manager with Employee Benefit Designs in Springfield, which manages Barry County employees' group health care coverage, said that group rates are based on factors such as age, ZIP code and industry, but the more members, the more risk can be spread out.

"The trend for groups in general has been a 12 percent per year increase," she said. "In my opinion, I think the ACA was great in the first year. Rates were really cheap, but the [the government] thought people were going to jump on and didn't, and all the healthy people ended up having to pay for the sick people. With the group plans we have seen a big increase."

Miller said she has a group that's over $630 per employee already, then had a 40 percent increase.

"With bigger groups like Barry County that have 50-plus members, the health of the group is what could hurt them," she said. "[Illnesses like] cancer, heart issues and diabetes drives the rates up, and they have to stay within that same carrier and eat that. Either the employer eats it, or they split it with the employee. The reason employers offer coverage is to retain quality employees."

And within the ACA platform, if an employee has a bad year health-wise, expenses could rack up quickly and the insurance company is on the hook.

"It's claims-versus-premiums, so the insurance company is upside-down to pay the claims," she said. "That's what underwriting is about - looking at the overall health of the group and setting the rates. It's just a roll of the dice."

Stone County Presiding Commissioner Dennis Wood is also expecting increases.

"I do anticipate that we're going to have a giant jump in a year or two because of the full implementation of what our president has done, but have no way of knowing what or how much," he said. "We're looking at maybe doing some self-insuring where we pay for the minor things and have re-insurance.

"It's a serious consideration for county government. We really watch the expenses, and we can see some swings that are happening. We are so dependent on not having any big claims, because if you have two or three, you're going to see the result of that for the next several years."

In conclusion, individuals, groups or insurance companies are getting what was promised out of Obamacare and future rates are uncertain.

"I think America has reason to be concerned," Miller said. "Whoever the next president is, someone will have to keep Obamacare in place. It's not that easy. You have to be in compliance with rates, benefits and the law."

"I think the intentions were good, but something has to be done," Smith said. "The ACA is not going to be sustainable. People are not going to pay [or be able to pay] the premiums, and the insurances are not going to put up with losses if they can't get healthy people in their system."

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