Small Tennessee employers renew plans early to stay ahead of health reform costs

Small Tennessee employers renew plans early to stay ahead of health reform costs

December 6th, 2013 by Dave Flessner in Business Around the Region

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A workshop in the new Affordable Care Act is planned for businesses today from 11 a.m. to noon at The INCubator, 100 Cherokee Blvd. Hosted by the Tennessee Small Business Development Center, this event is free and open to the public. Call 757-8668 to register.

Most small employers in Tennessee have opted to renew their existing health insurance plans for another year this fall to stay ahead of potentially costly changes coming from the requirements of the new health care reform law in January.

But those that have not and are looking for continued health insurance in 2014 are often facing record high premium increases, employers and insurance brokers said Thursday.

"For groups with fewer than 50 employees who didn't take an early renewal of their plans, we're seeing a significant increase in their premiums and at the same time less covered benefits," Russ Blakely, a health insurance broker in Chattanooga for the past 35 years, told business leaders Thursday at the Downtown Chamber of Commerce Council meeting. "There is a real shock for many and we want to slide those notices under the door and run."

While low-income individuals and businesses with older and sicker workers are benefiting by the new law, small employers with younger and healthier workers are usually having to pay far more under the new requirements of the Affordable Care Act. Blakely said small employers who didn't renew their plans already this fall and are trying to maintain current coverage are often facing rate increases of 35 to 40 percent. Tennessee, Georgia and Alabama are among a half dozen states where small employer premiums are going up the most, according to a preliminary rate comparison by The Wall Street Journal.

The new law requires insurers to cover all individuals, regardless of their pre-existing health conditions, and limits the variability among plans and many of the options employers and insurers used in the past to limit coverage and hold down costs.

"Many individuals and employers are paying more for more benefits under the new law," said Roy Vaughn, vice president for BlueCross BlueShield of Tennessee, the state's largest health insurer.

But Blakely said many groups are ending up with plans that have higher deductibles for members and higher premiums for both the employer and employees. Small businesses, especially those whose claims experience was better in the past, are often getting hit with the biggest increases in premiums.

"It seems like those of use who have tried to do the right thing are being punished," said Bob Doak, president of the Chattanooga Area Convention and Visitors Bureau, which has 21 employees covered by a BlueCross plan.

The new health care law is expanding coverage to millions of individuals who now lack insurance by providing subsidies to help individuals purchase plans and by removing insurers' ability to deny coverage based upon an individual's previous health problems. Despite early problems with the federal government's web site, wwww.healthcare.gov, Tennesseans are beginning to enroll in new plans, Vaughn said.

Vaughn said BlueCross could make an announcement as early as today about whether it will allow small groups to extend existing plans for another year, as President Obama has asked insurers to do because of the initial web and sign up problems.

"We expect to be able to make an announcement as it relates to small groups in the next few days," Vaughn said. "Knowing the concerns that small businesses had we already offered an opportunity for early renewal of plans for another year (into 2014). We had many, many of our groups take advantage of that. We're still trying to figure the impact of an extension, knowing that we have already provided an extension for most of our employer groups."

Erlanger Hospital President Kevin Spiegel said employers, individuals and health care providers will face new challenges from health care reform, but he hopes the new law will ultimately encourage more healthy living and lower health care costs.

Erlanger expects to pick up more patients as the designated health care provider for one of BlueCross's least expensive new plans under the Affordable Care Act. To ensure Erlanger is a low-cost provider, Spiegel said the hospital is outsourcing maintenance jobs, cutting employee benefits and limiting health plan options for its workers.

"We're aligning ourselves with primary doctors and working with payers and employers in a lot of innovative ways to try to encourage better health outcomes at less cost," Spiegel said. "You can't be everything to everybody."

Erlanger as an employer is limiting its own 4,000 employees to a more limited network of health care providers.

"Limiting the options will ultimately help control costs and drive down prices," Spiegel said.

Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340