The Star-Ledger

Health Insurance Rates Continue Climbing, And Companies Look For Savings To Offer Customers

The Star-Ledger — Wednesday, June 1, 2011

By Eliot Caroom / The Star-Ledger

Health care costs are a major expense for small businesses and the self-employed, who often buy individual health insurance policies. Just ask Geri Rosman, who runs Geri Rosman Public Relations in Bernardsville and pays her own premiums.

"As a small business owner, paying for my own health insurance is a significant monthly cost," Rosman said. "In January, my health insurance (premium) went up over 20 percent, more than $100 a month."

Her experience isn't unique.

Now some health insurance companies are introducing programs to reduce health care costs after premiums for both small businesses and individuals shot up in the last decade, including recent double digit increases.

In 2010, premiums for New Jersey small employers went up between 20 and 30 percent from the year before at Horizon, Aetna Health, UnitedHealthcare and Health Net, which collectively cover about 85 percent of the market, according to the state Department of Banking and Insurance.

The monthly premium for an individual Aetna plan with a $1,000 deductible rose from $504 to $1,164 since 2000.

A $1,000 deductible individual plan with Horizon Blue Cross Blue Shield rose from $315 to $1,456 in the same time span.

Many of New Jersey's more than 8.7 million people are covered by major employers, but about 10 percent, nearly 1 million people, are covered by small business or individual policies, according to state data. Another 1.3 million or so are uninsured, according to numbers from a U.S. Census Bureau survey.

Insurers in the state are offering small businesses programs to keep employees healthier and cut down on the need for care.

That includes UnitedHealthcare of New Jersey, which covers one fifth of individual health insurance buyers in the state and about 15 percent of small business plans. The company offers tailored preventative care programs to small businesses.

But even when employees become more healthy, medical costs themselves are nonetheless rising, and Michael McGuire, UnitedHealthcare of New Jersey's CEO, said that for that reason the program hasn't actually reduced a premium yet.

"No one's reduced their rates, because medical inflation is between 10 and 14 percent," said McGuire said.

Michael Munoz, a vice president at AmeriHealth, which covers about 8 percent of the small business customers in the state, said his company responds to specific needs-for instance, a business with a high number of diabetics could get a nurse to talk with employees about how to control the disease.

But Munoz said that even an employer with extremely healthy employees who never file a claim would still see rates increase.

Some organizations including Horizon Blue Cross Blue Shield hope to change that by reducing the cost of care with experimental programs for all its customers. It founded a subsidiary company called Horizon Healthcare Innovations that is launching pilot programs.

One Horizon program will pay physicians fees to coordinate patient care and may reward doctors for positive medical outcomes.

Another program will pay a single doctor or medical institution a bundled fee for all the necessary treatments surrounding a major operation like a hip replacement. The insurer hopes that will help doctors focus on quality and cut inefficient spending.

"I think it's definitely good to look into, and Horizon's not the only one looking into these payment reform models. They're looking at them across the country," said Crystal Snedden of the New Jersey Citizen Action Education Fund, an advocacy group. Snedden works with a coalition of 900 small business owners on health care issues. "What's important with us in those models is that as we're bringing down cost, we're also improving quality of care that those consumers are receiving," she said.

If Horizon achieves those goals for its 3.6 million members, that would be welcome news to people who buy their own insurance.

This year the state Department of Insurance and Banking reports seeing rate increases of 10 to 20 percent over 2010. That's less than last year, but still another in a long line of increases.

Copyright 2011 The Star-Ledger

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