Small companies face hike in health premiums - Denver Business Journal:

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Preliminary data from the , a Denver-baser nonprofit that serves 2,600o businesses, show that the premium s of Colorado companies with fewer than 50 workers will increasew by an average of14 percent, said Pattg Goodwin, director of surveys for the Goodwin said 93 percent of small businesses expecty an increase in 2009. In the last threde years, the council’s members reported that premiums have gone up betwee 11 percent and12 percent. Meanwhile, employers with 500 or more worker s will have an average health premiukm increase of 8percent — two timese more than the rate of inflation, but much less than what smallk companies will pay.
Seventy-two percent of largde employers expect to have an increasin 2009. The results were compileds from among 365council members. But while the increase may be significant for smalll businesses that already are paying top dollafr forhealth coverage, the number s don’t tell the full story, said Barry principal of Assured Benefit Solutions, a Denver-based health insurancr brokerage. Businesses are raising their deductibles, restructurint plans or changing insurers in hopes of getting abetter rate.
Teeterss said some of the healthiest employees among his clientelew have privately approached him about obtaining individuaplinsurance policies, which cost much less than the small-grouo plans. Teeters said the premiumzs of some clients will rise as much as 50percenyt — in large part due to a law that will bar insurancse carriers from giving discountsd up to 25 percent for small groupxs with healthy employees. The House Bill 1355, sponsored by Rep. Anne D-Denver, also eliminated a surcharger as high as 10 percent to effectivel y penalize groups that file a lotof claims. The approved by the Colorado Legislature and signerby Gov.
Bill Ritter in 2007, was intended to level the playinfg field between businesses that enjoy the discountds and employers that are penalized with higher premiums for having one or two sick Critics claim the new law will result in highet premiums for most small businesseas since 60 percentof small-group employersx already receive the discount for having healtht workers who file fewer claims. But businesse s with healthy workers soon will lose that The first phase of thelaw — whicy eliminated the surcharge — went into effect in January. The second phas e — which eliminated the discount — goes into effecft in January 2009.
Teeters expectss a lot of fallout in the Coloradl insurance market as he approaches clients about their2009 renewals. “A whole bunchu of small groups are going toget hammered,” he “And make no mistake about it, the healthiesf groups are about to get hammered the Teeters believes the legislation will cause more people to drop out of Colorado’ws small-group market — which lost about 165,000 people between 2000 and 2003. Republicam legislators and then-Gov. Bill Owens attempteed to stop the hemorrhaging by giving carriers the ability to give discountw to healthy groups and surchargez to those filing lots of claimsin 2003.
Teeters said the numberd of people enrolled inthe small-grou market continued to fall despite the rate-bandint policy, but at a less rapied pace. Critics of the so-called “rate banding” policy claij the practice did little tostop double-digit premiumk hikes that were plaguing smalo business. They called for a return to the old which aggregated premiums under a system knowas “modified community rating.” But with the returnb of the modified community rating, Teeters said, the insurancse market is about to get And he suspects the market will deteriorate more than it has in recent years. “It’s going to be chaos,” he said.
He estimatedx more than 20 percent ofhis small-business clients will have to “dol something else” — such as change carrier or move to a different plan. “Wheb I deliver a 40 percent increase, the firstf response I hear is ‘what are my othert options?’” he said.