confessions of a Benefits Broker. All the wailing about inflation on the news “Does NOT Compare.” Guess what? This level of inflation has been the “cuckoo norm” in the corporate benefits industry. From 1999 to 2021, the average inflation has been 12.91%, oh heck, let’s call it 13%! So, in context the increase in the price of eggs that everyone is howling about as the abnormal black swan occurrence, well…. that’s every year in my world.
Imagine your best breakfast of steak & eggs: two strips of bacon, sunny side fried eggs, and a nice cut of steak, two slices of buttered toast, accompanied with a nutty, rich bodied and well-balanced cup of JOE. Well, that Denny’s Cholesterol Grand Slam Stroke Special is at a 40-year high. The last time prices were this high was in 1982, the top song was “Eye of the Tiger”
All the wailing about inflation on the news “Does NOT Compare.”
Guess what? This level of inflation has been the “cuckoo norm” in the corporate benefits industry. From 1999 to 2021, the average inflation has been 12.91%, oh heck, let’s call it 13%! So, in context the increase in the price of eggs that everyone is howling about as the abnormal black swan occurrence, well…. that’s every year in my world.
We as brokers get the privilege of communicating medical inflation to employers. When I first started in the industry, I was coached how to message the abhorrent increases to employers, “Raj just take the renewal and express it in the monthly, so if it’s 12%, just say ‘its in line with trend, its about 1% a month” That trainer must have binge watched Glengarry Glen Ross, too many times.
Unlike the current state of affairs that are flaming inflation, that God willing will get better, with an end to the invasion of Ukraine and the flushing out of the supply chain issues, medical inflation will NOT!
It will NOT! Because every single day in the U.S., about 10,000 people turn 65 and retire, this will continue till 2042. Ahh, yea 20 years.
1. These retirees will take advantage of Medicare, what they call Medicare we call Anthem, Kaiser, Cigna, UnitedHealth Care, etc…
2. The reimbursements to the insurance companies for any-all Medicare services, is at times a loss, maybe breakeven, and rarely profitable. (unless hospitals/insurance companies engage in fraud by ordering unnecessary test & procedures.. that is for another confession)
3. The insurance companies turn to their Golden Goose – Employer Sponsored Health Plans – and pluck feathers!
According to the Kaiser Family Foundation (KFF), about 156 Million Americans (around 49% of the country’s total population) obtain health insurance through their employer. Health insurance is the last item an employer will cancel. They may cancel vision insurance, pet Insurance, free snacks, etc., but once an employer terminates health insurance it’s either a sign of future bankruptcy and/or salaries will be next.
This is not only true during the crash of 2008, the current “Great Resignation Wave,” and ultra tight labor markets, it’s always been the case. Since WW2 when our heroes returned home and looked to start a family, health insurance was then and still is today the second question behind “what’s my salary?” (ok, there are few exception.. the vulgar Silicon Valley Stock options being one.. ) The U.S. employer, large and small, has been absorbing the renewal rate shocks for years!
Why share such cheerful news, and reminisce of nostalgic benefits history,… it’s to prepare you. Going forward plan for 6% to 12% annual renewals. Prepare your budget today for the next 10 to 20 years. Very few employers will be able to maintain their current quality of benefits.
If you must share the increases with your employees, do it consistently. Too often renewals are absorbed by the company for years only to implement punitive increase in a single year to make up for a short fall. Such moves take away the goodwill of the benefits offerings.
In the following slides we have vectored three different reports to amalgamate a narrative of what the current premiums, deductible, employee contributions, and offering are.
We can’t Google your competition’s benefits plans or how much they are charging their employees, but this deck comes in close second.
Also check out the interactive chart: https://www.kff.org/interactive/premiums-and-worker-contributions-among-workers-covered-by-employer-sponsored-coverage-1999-2021/
Company Name: ExpertQuote
Contact Person: Lauri Comoli
Phone: 408 213 5087
Address: 477 University Ave, Los Gatos, CA 95032
City: San Jose
Country: United States