Entries in Benefits & Premiums (29)


Let’s Move to the Atlantic Seaboard or North Dakota: State Specific Premium and Deductible Data

by Clive Riddle, December 3, 2010

The Commonwealth Fund has just released a report with state specific premium and deductible trends for the past seven years: State Trends in Premiums and Deductibles, 2003–2009: How Building on the Affordable Care Act Will Help Stem the Tide of Rising Costs and Eroding Benefits.

The talking points the Commonwealth Fund promotes in conjunction with the report: (Premiums increase 41%! Deductibles increase 80%) are a little disingenuous as those percentages cover a seven year period (which they dutifully note) but the average ready typically relates such percentages into annual terms, and headlining the equivalent average annual increase could have been more meaningful.

The Commonwealth Fund’s theme from their report is, as Commonwealth Fund Senior Vice President Cathy Schoen tells us, “private insurance costs have been increasing faster than working family incomes. For more than a decade, families with job-based insurance have been sacrificing wages to hold on to health insurance. The good news is that the Affordable Care Act reforms provide a foundation to improve coverage and slow health care cost growth in the future."

Regardless of what conclusions you draw from the 32 page report, it contains great state specific data on average health plan single and family premiums and deductibles, further broken down by employer size. They also examine premium as a percent of median household income. The report goes on to project future increases, with and without the impact of the Affordable Care Act, thus indicating projected savings from the Act.

The report notes “by 2009, the average employer-sponsored family premium across all states was $13,027, ranging from $14,000 to $14,700 in the six highest states….to $11,000 to $12,000 in the 11 states with the lowest average private-employer family premium costs…. Average family premiums in the highest-premium-cost states were about 23 percent above those of the lowest-cost states….. By 2009, there were 15 states in which the average annual premium for family coverage equaled 20 percent or more of median household income for the under-65 population, compared with just three states in 2003 ….  In 28 states, family premiums relative to incomes averaged 18 percent or more for middle-income, under-65 households.”

The report found that U.S. average deductibles by firm size were:

Small Firm Single Deductible: $    703 in 2003 / $ 1,283 in 2009
Large Firm Single Deductible: $    452 in 2003 / $    822 in 2009
Small Firm Family Deducible: $ 1,575 in 2003 / $ 2,662 in 2009
Large Firm Family Deductible: $   969 in 2003 / $ 1,610 in 2009

Here’s some interesting state-specific data from the report. From an affordability standpoint (premiums as a percent of income) the Atlantic seaboard or North Dakota may be your best bet.

Five Highest Family Premium States

(2009 Data: US Annual Average $13,027)
Massachusetts: $14,723
Wisconsin: $14,656
Vermont: $14,558
Wyoming: $14,319
District of Columbia: $14,222

Five Lowest Family Premium States

(2009 Data: US Annual Average $13,027)
Arkansas: $10,969
Montana: $11,365
Oklahoma: $11,417
North Dakota: $11,590
South Dakota: $11,596

Five Highest States: Avg Premiums as % of Median Household Incomes

(2009 Data: US Annual Average 18.7%)
Mississippi: 24.6%
Texas: 21.9%
Louisiana: 21.6%
New Mexico: 21.5%
North Carolina: 21.2%

Five Lowest States: Avg Premiums as % of Median Household Incomes

(2009 Data: US Annual Average 18.7%)
Connecticut: 14.6%
New Jersey: 14.7%
Maryland: 15.0%
Virginia: 15.0%
North Dakota: 15.5%


Workers Comp: Medical Benefits Slice of the Pie is now the biggest

by Clive Riddle, September 10, 2010

The National Academy of Social Insurance (NASI) has just released a 112 page report: Workers Compensation Benefits, Coverage and Costs 2008 which provides  comprehensive data on workers' compensation cash and medical payments for the nation and for each state, the District of Columbia, and federal programs.

This year, for this first time ever, the report finds that medical benefit claims exceed cash compensation payouts. Here is a summary data table provided by the NASI:

Figure 1: Workers' Compensation Spending, 2008


Type of Spending

Billions of Dollars

Percent  Change


Total benefits paid




  Medical payments




  Cash benefits




Employer costs




Amount per $100

of Covered Wages

Per $100 of Payroll

Dollar Change


Benefits paid




   Medical payments




   Cash payments to workers




Employer costs




Source: National Academy of Social Insurance, 2010.


Continual health care inflation, utilization and other medical cost escalators are blamed. John F. Burton, Jr., chair of the report panel tells us: The growth in medical spending may reflect both higher prices for medical care and greater use of services. The increase is the continuation of a long-term trend since 1980, but this is the first year that payments for medical care were more than half of all workers' compensation benefits."

However, one additional factor is probably in play. Given 2008 data would be the first year to reflect the great recession, intuitively one might assume the cash compensation slice of the pie was diminished by a shrunken work force.  So while health care costs are an easy target and typically a deserved scapegoat, the economy would seem an equal explanation for why the pie is being sliced up differently.


COBRA Costs: The Good News, Bad News and Good News

by Clive Riddle, August 27, 2010

The good news: earlier this summer, PricewaterhouseCoopers, in their Behind the Numbers Medical Cost Trends for 2011 report, had this to say about COBRA costs:  “COBRA costs are expected to return to more normal levels in 2011. COBRA subsidies passed by Congress in 2009 created a 1% upswing in the medical trend. Laid-off workers who continued their healthcare coverage typically incurred medical costs of two to four times higher than those of other workers. In 2010, the combination of higher unemployment and new government subsidies to pay for COBRA coverage led to a significant increase in COBRA coverage. A combination of declining unemployment and expiration of the COBRA subsidies is expected to lead to reduced enrollment in COBRA in 2011.”

The bad news: Aon Consulting has just released results from their 2010 Benefits Survey, which found average monthly COBRA premium costs increases from 2009 for the cheaper HMO policies took an extra annual $360 for single coverage and $960 for family coverage from the unemployed and others who opted for COBRA coverage. Here’s a table we compiled from the Aon survey results:

COBRA Monthly Premiums



% Increase

Total Increase






Employee Only





Employee +1





Employee + Children





Employee + Family










Employee Only





Employee +1





Employee + Children





Employee + Family





"The increased frequency and duration of COBRA use is creating a significant strain on the program, leading to higher costs. Those who are unemployed, and facing uncertainty about employment prospects and future COBRA availability, are utilizing the program more than we've traditionally seen to treat a variety of conditions prior to potentially losing coverage. This coupled with the high unemployment rate, is placing the COBRA program in a unique and unprecedented position."" John Zern, Aon Consulting’s executive vice president and Health & Benefits Practice director tells us.

The good news: the COBRA premium increased from 2009 to 2010 on a percentage basis were in line with non-COBRA premium increases, even though the population would be considered to be much higher risk.


How Brokers See the Recession’s Impact on Employee Benefits

by Clive Riddle, June 4, 2010

Survey data on employee benefit trends and implications surrounding such drivers as the recession typically focus on data from large employers.  Large employers, of course, represent the clientele of the major benefit consulting firms that produce the majority of such studies.

Thus it is interesting to consider perspectives from the broker population, which typically represent smaller and mid-size employers. Colonial Life conducted broker surveys at two large national broker conferences during March and April, regarding the economy’s effects on benefits.

Here’s the results provided by Colonial Life, which indicate expansion of voluntary benefits, increasing employee contributions, and adding HSAs/HRAs are the top strategies:

  • Added voluntary benefits options – 59%
  • Increased employee contributions – 48%
  • Added benefits options – 35%
  • Added a health savings account – 29%
  • Switched carriers – 28%
  • Reduced benefits options – 27%
  • Added a high-deductible health plan option with an health reimbursement account – 26%
  • Increased employer contributions – 10%
  • No change – 9%

In this environment, 80% of the brokers surveyed said voluntary benefits are very important to the overall benefits package they offer business owners. It thus could be beneficial for various stakeholders to do their homework on what existing and emerging products are being offered through the voluntary benefits market, and consider their implications.


The Center for Health Value Innovation on Value Based Design

by Clive Riddle, May 27, 2010

This week, Cyndy Nayer, M.A., President, CEO and co-founder of the Center for Health Value Innovation and Michael S. Jacobs R. Ph., Principal and National Clinical Practice Leader, Buck Consultants, LLC  (also a board member at the Center) spoke in the HealthcareWebSummit event Leveraging Health: Current Impact of Value Based Design.

What’s going on with Value Based Design initiatives right now? Glad you asked. While some other elements of health reform have stolen the spotlight during the past few months, VBD continues to move forward as a key solution to its core stakeholders. 

The Center for Health Value Innovation is an educational organization that serves as an information exchange for value-based designs. The Center’s members include health plans, employers, unions, government, pharmaceutical organizations and other stakeholders that represent over 40 million lives. The Center recently published a new book, Leveraging Health, which shares findings from their recent interviews and surveys that identify more than 100 levers that influence consumer and patient behaviors in Value-Based Design, and15 categorized macro-levers.

Definitions of Value Based Design have evolved over time. The Center has this to say about defining VBD: “It’s important to note that value-based designs (VBD) are much more than waived or reduced co-pays for chronic care, particularly medications.  A value-based design uses evidence-based clinical impact merged with financial impact (Health + Economics) to guide the behaviors of populations in managing their health.  VBD can influence choice of care provider, appropriate and persistent treatment, and early risk/prevention/wellness.  All of these have been documented to show a meaningful impact in health status, productivity (safety, disability, unscheduled absences, and more), quality and financial cost trend.”

Nayer and Jacobs expanded on this definition during their presentation, stating:

  • VBD is an engagement tool that engages the employee (consumer) and the employer (plan sponsor) and the provider (clinician)
  • VBD focuses on outcomes:  better performance
  • VBD is driven by data that drives the suite of performance tuners: levers
  • VBD is sustainable and applicable at the small-large employer and at the community level
  • VBD builds the Health-Wealth-Performance Portfolio
  • VBD uses Data to invest in incentives (Design) and services (Delivery) that change behavior for improved health, quality, performance and financial trend (Dividend.)       

They note that EAP and behavioral health are important components of VBD, given that behavioral change is the key to sustaining value. They further advocate that if value is to be built on outcomes, than purchasing must be aligned. Nayer and Jacobs stat that Outcomes-Based Contracting must align incentives between the contracting parties.

After VBD emerged as a mainstream concept and solution, the Great Recession intervened, and Nayer and Jacobs point out the effect of the economy on health behaviors, placing employee/patient compliance, adherence and persistence at risk.

Here’s some of the Center’s survey results they shared, which are incorporated into their book, Leveraging Health. Over 100 companies responded to their survey, representing over 1 million lives:

87% Use incentives (levers) in prevention and wellness, 60% Use levers for chronic care management, and 26% Use levers for guidance to appropriate care delivery

Given that VBD programs provide various forms of incentives, including applicable waivers of cost sharing, an obvious concern in a down economy would be that employers would feel pressure to pull back in these areas to in the name of achieving short term savings. However the survey indicated 79 % of the employers with VBD in place two or more years made no VBD changes in 2009 and 56% did not plan to make changes in 2010.

Of the 44% who did anticipate changes in 2010: 64% of them plan to pass more of the cost of brand drugs to the employee; 16% plan mandatory enrollment in disease management programs; and 16% plan to pass more of the cost of generic drugs to the employee.

Additional survey results:

  • 63 % waive employee cost sharing for yearly screening exam
  • 40 % provide insurance premium incentive for completion of a Health Risk Assessment (HRA)
  • 54 % cover depression under care management program
  • 70 % reduce/waive co-pay for utilizing the lowest cost appropriate site of care (e.g., urgent care, convenient care, onsite services, medical travel)
  • 58 % provide incentives for the use of EAP programs
  • 35 % provide incentives for financial counseling
  • 20% reduced applicable prevention screen cost for age/gender appropriate groups
  • 18% provided an insurance premium incentive for completion of a biometric screen
  • 13% reduced OOP costs for setting and/or achieving health promotion goals
  • 13% provided insurance premium incentive for complying with recommended prevention exam
  • 12% adjust their condition-based formulary (all tiers lowered for specified conditions)
  • 12% link co-pay/coinsurance waivers to mandatory condition management

Employers also indicated these as their top challenges to deploying their VBD programs (more than one answer allowed):

  • 53% - Increasing engagement with employees: slow to use the new benefits
  • 45% - Enrolling employees in disease management programs
  • 42% - Keeping the momentum going
  • 34% - Obtaining and integrating data
  • 34% - Lack of communication with physicians/pharmacists/clinicians
  • 34% - Communicating benefits with the covered lives
  • 32% - Segmenting and interpreting data
  • 18% - Communicating success with the covered lives
  • 13% - C-Suite support