Premium Increases Highest in Five Years
The Atlanta Business Chronicle has an article highlighting the significant increase in health insurance premiums predicted for 2011. In the Atlanta area, premiums “are projected to spike 8.7 percent in 2011, compared with a 5.7 percent increase this year.” Total out of pocket costs for employees are scheduled to rise 13 percent in 2011 compared to this year’s levels. The article notes that the health care law is contributing to the rise in premiums: “There are 1200 sections in the bill…that are still being written…That causes uncertainty, and insurance companies have to protect themselves by increasing the rates.” For instance, one large Atlanta employer found that the law “is expected to add about $25 million to the 1800-employee company’s health care costs by 2014”—an increase of nearly $3500 per employee per year.
The article concludes on an ominous note – that employers could collectively decide to drop their existing coverage offerings, leading to a significant rise in federal spending as many more people than projected become eligible for taxpayer-funded insurance subsidies:
As low-cost publicly available health plans emerge, some companies could forgo offering coverage since some employees will have easier access to subsidized health insurance, Tate said.
Under the health reform bill, employers will be required to provide health insurance coverage to employees — or face fines. Some businesses are going to look at their employee health-care benefit costs and consider dropping the coverage, pay a fine and let their employees buy health coverage from the government.
If an employer has an option of paying a $2,000 fine versus paying $6,000 in employee health-care premiums, Smith said, “the balance sheet is going to say it’s a lot easier to pay the $2,000, than the $6,000.”