Cost of health insurance claims expected to climb 10% over next year

The cost of health insurance claims is expected to rise, according to a new report, but insurers say they are getting tougher when negotiating prices with hospitals.

"The costs that dictate employer-provided health insurance plans will climb more than 10 percent within the next 12 months, and financially pressured companies may pass more of this increase along to their workers through next year's benefits plans, according to an Aon Consulting report...," The Associated Press reports. "In a survey of about 60 health organizations around the country earlier in the year, Aon Consulting, a subsidiary of insurance broker Aon Corp., found that insurers expect to pay out 10.7 percent more in claims for preferred provider organization, or PPO, managed care. … The premiums that workers pay may not grow at the same clip as the cost of claims. Premiums can be influenced by geography, an insurance plan's design, the health of the people covered and insurer profitability, said Tom Lerche, Aon Consulting's health care practice leader" (Murphy, 9/14). 

The Wall Street Journal: "Some of the nation's largest health insurers say they're getting tougher in price negotiations with hospitals and are using their clients as leverage, as health plans and employers try to restrain medical costs. Employers are warming to the idea of narrow provider networks as a way to save money, which is helping in contract talks with hospitals, health insurers say. In some cases, managed-care clients want to become directly involved in hospital negotiations. ... Over the past decade, clients were happy to let the health insurer do the bargaining, [Aetna Inc. Chief Financial Officer Joseph Zubretsky] said at a Morgan Stanley health-care conference, 'but now it's getting so intense that the CFOs of our client companies want to sit at the table as we negotiate rates (with) hospitals, and they are willing to use the steerage threat as a way to get better pricing'" (Brin, 9/14).

Bakersfield Californian reports on other tactics businesses are using to reduce health insurance costs, including offering additional plan options or raising co-payments. "There's every reason for employers to consider their options. Across the country commercial insurers are raising their rates, which is nothing new except that it's happening at a time when businesses and workers can least afford it. … Renewed emphasis on employees' health has also become more widespread. When companies are able to show their workers are improving their fitness, insurers are more likely to see them as less of a financial risk, and may pass along some of the perceived savings. Another approach has been to shop around in hopes that a different insurance carrier will offer a better deal" (Cox, 9/14).

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This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.