By Molly Mulebriar
Fully insured rates are going through the roof this quarter. I have looked at three renewals in the past two weeks and they are brutal. The ACA punishment taxes that were not supposed to hit the middle class but is doing just that. An estimated 8% of renewal increases are directly attributable to these fees (John”If I Had A Son” Roberts calls these fees “taxes”).
The carriers are using trend factors that are out of sight despite a recent study that shows medical trend in Texas is under 4%. With each 1% in trend, rates go up 2.2%. So a 10% trend earns a 22% load to rates (could be offset by renewal calc. to some degree). Of course we all know why trend is as high as it is. It is an integral part of an historic conspiracy between third party intermediaries to earn additional revenue that is one of the best kept secrets in the industry. For example, “shared savings” off chargemaster rates no one ever pays is a scheme that would make even Bernie Maddof blush.
A possible solution to those who are hell-bent on remaining fully-insured includes purchasing a high deductible plan coupled with a MERP. In addition to the MERP a risk transfer mechanism (American Risk) would be in place to provide high claimants with improved benefits during Open Enrollment by moving them to individual policies. This strategy of Exchange Dumping passes on large risks on to the public at large.
If 25% of any given population never has medical expenses during the year, and less than 10% have claims in excess of $5,000 per year, removing high claimants each succeeding Open Enrollment further erodes the percentage on the later and increases the percentage on the former. This could be a tremendous strategy for employers who are fearful of self-funding but are wiling to use premium savings through a high deductible plan to fund a MERP along with the protection afforded by Exchange Dumping.
