Review of Health Insurance Sales Leads
Agents should know that closing health insurance leads today will get more difficult as premiums outpace workers’ wages by more than 3:1, and inflation by more than 4:1 in the last decade.
The Kaiser Family Foundation and Health Research Educational Trust in a recent report found that private employer-sponsored insurance premiums in 2009 rose 131% (to $13,375) from 1999. Workers’ wages, on the other hand, rose 38% and inflation to 28% for the same period. Although premiums rose by single digits in recent years, mainly due to the economic downturn, they increased in double digits from 2001 to 2004 (10.9%, 12.9%, 13.9%, and 11.2%). Wages just couldn’t keep up with those figures.
The survey report also found that workers were offered health benefits by only 60% of companies this year. Of these, 21% either decreased the scope of health benefits to employees, or increased the cost of sharing because of the recession. About 15% said their workers’ share for the premiums increased. As in the past, the smaller firms are less likely to offer health benefits. Only 46% of small employers (with 3 to 9 employees) offered health benefits.
Agents looking for health insurance leads should be aware of more cost control measures for the sake of both employers and employees alike, given the current economic downturn. Drew Altman, President and CEO of Kaiser said employers and workers “really feel the pain” when health care costs rise much faster than overall inflation. This is the reason why health reform is being debated in congress and throughout the country.
The survey shows that many workers with employer coverage face high deductibles in their health insurance plans, in addition to providing premiums for their own coverage. 22% of insured employees will spend at least $1000 of their own money for single coverage before their plan begins to pay a part of their health care bills.
Increases in insured employees with high deductibles are a result of changes in large employers (firms with more than 200 workers). But employees at smaller companies are still more likely to fork out large deductibles. For workers at big firms, 13% face deductibles above $1000; 40% at smaller firms (3 to 200 workers), 16% of which have deductibles greater than $2000.
PPOs or Preferred Provider Organizations still dominate the employer market, arranging enrolment for six out of ten covered workers. HMOs or Health Maintenance Organizations cover 20% of workers. POS or Point-of-Service Plans cover 10% and 8% with consumer-directed plans. Both POS and consurmer directed plans have high deductible premiums that include tax-preferred savings options like a Health Savings Account (HSA) or Health Reimbursement Arrangement (HRA).
For 2010, 21% of firms report that they will “very likely” increase their workers’ contribution to premiums. 16% hint that they will “very likely” raise deductibles. A mere 4% said that they will “very likely” restrict coverage eligibility, and 2% say that they will “very likely” do away with health coverage altogether.
Gary Claxton, Kaiser Vice President and the study’s lead author, said many businesses are struggling with ways to manage their health care costs. This includes offering high-deductible plans for employees. But few expect to do away with health benefits entirely.
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