Group Health Insurance Providers Brace For Change
Bickering in Congress has shifted from health insurance to jobs. But while our elected leaders treat the two national concerns as separate issues to be dealt with, they are not at all exclusive of one another. Need proof? Look no further than Wall Street.
There's a sea change shift coming in the group health insurance industry. Providers like Aetna, Wellpoint, Humana, CIGNA who have the dubious honor of announcing their earnings to investors, feel the undercurrent, are bracing for the change and changing course before they're forced to do so. All the major group health insurance companies told investors at their last respective earnings conference calls they would be making huge job cuts of their own because there are less people employed and even less who are employed by businesses that provide health insurance coverage to their workers.
Even though leading U.S. economists say we're on an upswing now, pointing to data showing less unemployment filings and more new housing starts, this is not a trend or simple short-term blip to brush aside. To be sure, once our nation's economy does hit full steam again, the steam won't be nearly as thick. Small business owners and large corporations alike are already cutting back on benefits and/or increasing employee contributions to their group health insurance as a stop-gap measure to stem bleeding in their books. When workers get used to the idea of paying for their own health insurance plans and further, find out it costs less than switching to the one their employer provides, an already emerging market of individual health plans bought on the open market gets bigger.
Data from the research and policy arm of America's Health Insurance Plans revealing premium and benefit information from 761,000 small businesses shows the average annual deductible for PPOs have gone from $917 to $1059. The number of companies with a PPO health insurance plan has shrunk, too. Employers with less than 50 employees are shifting to less costly HMO group health insurance that have tighter (and smaller) networks of doctors for their employees to chose from. About 50 percent of small companies report they have group HMO coverage, down from 41 percent in 2008.
Meanwhile, group health insurance companies are turning more of their attention toward more lucrative Medicare and pharmacy businesses. With more baby boomers eligible for Medicare now more than ever before, group health insurers are spending billions of dollars in newspaper, magazine and television advertising to lure them into purchasing their Medicare supplements. It's as if they insurance companies themselves have grown just as tired of the health care reform battle as their subscribers have and moved on. Some, like CIGNA, find their financial destiny lies overseas in places like Russia and China. Others, like United, Aetna and Humana, are stepping up marketing efforts to individuals and family health insurance products.
It will be an interesting transformation to watch. Let's only hope the next chapter to be written in Health Insurance Business 101 doesn't focus on premium hikes.
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Questions and Answers
Family health insurance is less costly than individual health insurance. People who choose family health insurance have to pay the entire cost of the regular premiums themselves. For some people this may work out to be less than the premium they have been paying for the employers’ group plan. One of the most important points that consumers should know is that all money spent on the insurance premiums are 100% tax deductible.
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