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In the current environment, selling group health insurance sounds about as painful as undergoing root canal surgery without anesthesia.
Rates have been going in only one directionup, and up, and up some more.
Nonetheless, many longtime group health producers say they are sticking with the product.
David Fear, an agent with California Insurance Marketing Services, Sacramento, Calif., says he continues to see accelerating rate increases.
"Wed moved a lot of people to HMOs because their rates were lower, and now theyre up," Fear says. "Its pretty consistent across the board. In the past the HMO rates werent rising as fast."
But Fear has no intention of bailing out of selling health insurance.
"My job is to provide my customers with options," he says. "Its an honorable profession. Ive been in this business from 1979 and invested time and effort."
Some other producers report seeing signs that the rate increases in their markets are moderating.
Although rates in Ohio have not yet stabilized, they are increasing at a slower rate than in the recent past, says Charlie Collins, a partner at Collins Financial Services, Columbus, Ohio.
"Everyones getting increases, but theyre about 25% less than what they were last year," Collins says.
In Virginia, rates went up an average of about 18% to 25% each year in 2000, 2001 and 2002, according to Susan Rash, a vice president at BB&T Benefit Consultants, Richmond, Va.
This year, the average rate increase is somewhat smaller, Rash says.
The producers observations support a prediction by Loren Suter, deputy executive officer at the California Public Employees Retirement System, that 2004 rate increases will be smaller than 2003 increases, and 2005 increases will be noticeably better.
Past rate increases may have lowered employers resistance to future increases.
The National Association of Health Underwriters, Arlington, Va., recently asked 15,000 brokers how much of a rate increase typical employers would tolerate before switching plans.
Brokers told NAHU that employers might accept increases as high as 15% before taking their business elsewhere.
Brokers also have grown more tolerant of rate hikes.
"Weve gotten so immune to the increases, were happy when we see a 10% increase," Rash says. "In any other business that would be insane."
Meanwhile, although health finance experts worry that escalating insurance prices will force employers to drop coverage, demand continues to be reasonably strong in many communities.
In Ohio, even though employers are looking for ways to cut costs, no employer that Collins works with has dropped coverage.
"Weve seen tweaking on base deductibles and a lighter benefit on prescription drug cards, but we havent seen anyone not offer coverage," Collins says.
On the West Coast, John Nelson, a Westlake Village, Calif., broker, estimates that more than one-third of the health coverage his company writes each month goes to employers that are first-time group health buyers.
"I think it has a lot to do with the job market," Nelson says. "Its still pretty hot out here. Employers are interested in retaining their employees and need to maintain a level of benefits for them."
