Benefits

Managed care is here to stay, but costs are going up

By Teresa Dixon Murray

“I don’t think the trend of managed care is going to stop. It’s going to be even more restrictive,” says Barry Hofer, president of Business Benefits in Akron, whose client load includes 2,000 group plans covering 7,000 employees. “PPOs are almost outdated. Now it’s Point of Service alone or combined with an HMO.”

Medical networks will consolidate, with smaller folding into larger. But they won’t disappear.

“The only way to control what’s going on is through the networks,” Hofer says. “Whoever has the largest network will be the most appealing.”

Meanwhile, the big cost savings of managed care are over. Annual rate increases, which have been below 10 percent for several years, will once again hit the teens.

That may contribute to the growth in self-funded insurance. “I see the rebirth of self-funded plans on the horizon,” says Mike Coppola, employee benefits manager with Brunswick Cos., a Northeast Ohio health insurance broker covering 40,000 lives. “I also see the rebirth of standard major medical plans. Doctors hate managed care. Employees hate managed care. Everyone is beginning to hate it.”

Also on the horizon:

More mandated coverage. What’s after pre-existing conditions? How about mandated coverage of immunizations, PAP tests and other preventive care. Or a law giving consumers more power over an HMO’s decisions regarding their treatment.

More plan choices within a company. For employers with at least 100 workers, insurance carriers are reluctantly agreeing to share business; one company offers the HMO, another the PPO. But each wants a guarantee of at least half the employee base.

In coming years, look for more carriers to accept a smaller slice of business-meaning a 25-employee company might have three plan choices.

Increased use of pretax premium payment. It not only saves employees money, it has the effect of giving them a raise without increasing other payroll expenses.

Decline in peripheral coverage. Many employers are cutting back on group dental or vision because usage is low. Instead, they may start letting employees shop for these services and simply provide partial reimbursement.

Premiums tied into actual claims history. In the future, shopping for companywide coverage may involve detailed health questionnaires for each employee. The result: premiums that reflect real costs, but which are far above initial price estimates.

That will bring reality ever closer to the sticky issue of screening job applicants based on their medical risk. Right now, it’s limited to the legally murky territory inhabited by people who do things like smoking or skydiving. Could the marketplace bring it more into the open?

Brunswick President Todd Stein hopes not, but muses: “The law profession in the future looks really good.”