Colorado Employers Health Insurance Rates Moderate But Still High

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Nov 19, 2014, 12:17 ET

DENVER, Nov. 19, 2014 /PRNewswire/ -- The Lockton Mountain West Benefit Group in Denver announced the results of its 14^TH annual Colorado employer survey regarding health benefit costs and coverage. Average rate increases for 2015 are lower than last year, and although higher than national trends, this increase is more in line with the rate of increase anticipated nationally.

The survey revealed that the projected rate of increase for health plans in Colorado for 2015 is 8 percent. This was before plan adjustments or increases to employee contributions. This rate is down from last year's high of 10.9 percent. The average increase after plan changes, increasing the employee percentage cost share, and/or changing carriers, was 5.3 percent, down from 6.4 percent in 2014.

"This news is generally positive, but troubling aspects include the fact that 79 percent of surveyed employers will be expecting employees to pay for some, if not all, of the percentage of the increase in cost through their contributions or out of pocket expenses. In the context of the report's average merit pay increase of 2.7 percent, this cost of coverage for employees may be difficult to bear. Also, although the reduction from last year's 10.9 percent is positive, the three year average of 8.77 percent means that if that trend increases, rates will double in 8 years!" said Bill Lindsay, president of Lockton Benefit Group in Denver and the author of the survey.

Other notable findings from the survey include:

The level of increase in employee premium costs sharing is comparable to that of prior years, but it should be noted that these one year changes have a significant compounding effect, over time.
The increase in employee cost share was primarily in the cost for family coverage (50 percent of those responding). Since the Affordable Care Act (ACA) focuses on employees and children, and not spouses, we expect this trend to continue.
The other dominant strategy being deployed by employers is the reduction in benefit levels through higher deductibles, copayments, and coinsurance. This approach is notable because in this context, only the employees who use the plan will pay the increased out of pocket cost, where a change in premium contribution would impact everyone.
The survey reports that the ACA continues to be a significant concern for employers who sponsor health benefit plans for their employees. These concerns stem from the Act's onerous reporting and regulatory requirements (69.1%), the fees and taxes associated with the law (50%), the frequent changes in the rules, and the uncertainty over the costs for coverage.

The survey was sent to 602 Colorado employers. Survey respondents were selected based on size, industry, and visibility in the community. The survey was designed to engage a representative sample of Colorado employers to better understand the employee benefit trends in the Colorado market. This is not a scientific sampling. See the results of the survey here.

Questions regarding the survey can be referred to Ms. Deb Smith at 303-414-6151.

About Lockton

More than 5,300 professionals at Lockton provide 41,000 clients around the world with risk management, insurance, and employee benefits consulting services that improve their businesses. From its founding in 1966 in Kansas City, Missouri, Lockton has attracted entrepreneurial professionals who have driven its growth to become the largest privately held insurance broker in the world and 10th largest overall. Independent researcher Greenwich Associates has awarded Lockton its Service Excellence Award for risk management for large companies. For six consecutive years, Business Insurance has recognized Lockton as a "Best Place to Work in Insurance." To see the latest insights from Lockton's experts, check Lockton Market Update.

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