Looking Ahead to 2009 Plans... And Changes

 

Renewal time is upon us. It's a time when the majority of companies and organizations will settle on medical benefits for 2009 and more importantly, decide what their employees will pay for health and dental coverage. The landscape right now is, in a word, situational. We're seeing some clients sneak by with no change to their plans. Others have been pleasantly surprised by unexpected savings. However, not everyone will head into next year with such a rosy outlook.
Some of the factors affecting medical benefit plans in 2009 are expected - a struggling business or aging workforce can both contribute to rising costs. But for other companies, they didn't see the increases coming. Economic troubles have hit the manufacturing industry hard, which overall, are facing higher insurance costs next year. In fact, any business that is impacted by the struggling economy or seeing a decline in profits, may be in store for higher medical benefit costs in 2009.

 

Also, companies who've made recent acquisitions must be aware of potential changes in medical benefits. Acquisitions present a tough dilemma for companies - they may find a complementary business at the right price, but also must consider hidden costs inside the workforce. It's a buyer's responsibility to look closely at demographics - does this group of people file a higher number of claims? Are they older? Do they participate in wellness programs? These are all questions to ask. If you don't know the answers, you could face a situation like the one a client recently went through. The company they planned to acquire was a perfect match with their business, but the workforce couldn't have been more different. The deal went through, but the company's yearly insurance costs shot up $4,000 per employee as a result of the newly added employees. Considering the turbulence of the current economy, this is one surprise worth catching and budgeting for in advance.

 

It will also be interesting to see how the Massachusetts medical insurance climate changes in 2009. On one hand, the market is stable. Bidding is low, which means, all in all, companies are pleased with their plans. This is a unique market because it is dominated by local plans, but the state has also embarked on an ambitious plan to insure everyone in the state. While Massachusetts now has the lowest uninsured rate in the country, the program is over budget and with proposals to eliminate the state income tax floating around, the success of the program could be in jeopardy.

 

It also stands to be seen whether Massachusetts will veer toward more consumer-driven health plans in 2009. If the economic troubles continue, they will weigh heavier on the health insurance market and likely prompt more companies to look for new cost-saving options, in new places. We've seen it happen recently in New Hampshire, who are shifting to consumer-driven plans. HMO dominance and hesitancy to change in Massachusetts may be a tough hurdle, but it will be fascinating to see if outside factors push the envelope in 2009.