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Kaiser to raise California rates by up to 15% next year

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Kaiser Permanente has notified its California customers that it will increase its commercial rates by as much as 15.5% next year in the state, according to an email obtained by Repairer Driven News.

Kaiser notified its policyholders by email this month to say the pandemic, inflation, supply chain issues and nationwide staff shortages have “put pressure on our cost structure faster than competitors.”

“Additionally, care volume increased significantly throughout 2022, particularly in outpatient services,” the company wrote. “We continue to experience this demand for services that members put off during the pandemic.

“It is important that Kaiser Permanente continues to invest in technology, staff and facilities that allow us to deliver the high-quality care that our customers and members expect of us.”

The email expanded upon the effect, and said that customers can expect rates higher than their historical average including an adjustment to its rate cap for groups with the highest utilization.

Its average commercial rate increase for 2024 will be between 13.5% and 16.5% in northern California, significantly higher than the 5% hikes customers are accustomed to seeing.

Kaiser Permanente, which reported $1.2 billion in net income for Q1, has gained more than 120,000 members since last December.

It acts as both a coverage provider and service provider. The email from the Kaiser Permanente account manager made note of the dual role, stating: “Because we are both the insurer and provider of services, we feel the effects of inflationary pressure on our cost structure faster than our competitors.”

The dual role was also evidenced by its acquisition of Pennsylvania-based healthcare provider Geisinger Health and form a subsidiary called Risant Health.

“Geisinger [will be] the first health system to join Risant Health to expand access to value-based care in more communities across the country,” it said in a press release.

“… Risant Health will operate separately and distinctly from Kaiser Permanente’s core integrated care and coverage model while building upon Kaiser Permanente’s 80 years of expertise in value-based care.”

Kevin Dunn, chief executive of benefits brokerage firm Decisely, said inflationary pressures resulting from rising healthcare costs have created significant challenges for employers of all sizes and all industries, including collision repair shops.

“Many businesses have had to pass more of the cost burden onto their employees, resulting in higher deductibles and out-of-pocket expenses,” he told Repairer Driven News. “However, this approach can undermine employee retention and overall morale. Employees who cannot afford their health insurance are more likely to leave, and those who are sick or in poor health may not perform as well on the job.”

In fact, a recent Focus Advisors commentary on private equity in collision repair highlighted that “technicians at single shops will continue to migrate to larger entities where income is more stable and benefits are abundant”, specifying this is an area of importance for independent businesses to address to keep their talent pool from leaking.
Dunn noted that Decisely through its partnership with health insurer Gravie offers an alternative solution that helps employers–specifically small businesses–affordably maintain and improve upon employee health and satisfaction.

Gravie, which is available to the industry through Society of Collision Repair Specialists’ (SCRS) benefits center, gives industry employees and their relatives access to a marketplace of unique healthcare coverage options. Benefits of the core plans offered through the association partnership include:

    • $0 deductibles, and employees choose their out-of-pocket maximum
    • No-cost services for visiting primary care physicians, specialists, urgent care, labs, or having X-Rays. Generic prescriptions and mental health services are also free.
    • Out-of-pocket maximums ranging from $3,000-$7,900
    • Aetna and Cigna networks

He said Decisely’s data has shown that employees with insurance benefits are more likely to stay with their employers, resulting in better retention rates and higher job satisfaction, which is worth noting as repair shops struggle to attract and retain talent.

SCRS Executive Director, Aaron Schulenburg actually reported during an open board meeting in Richmond, Virginia that the richer healthcare offerings in the benefits marketplace have already motivated an average 25% increase in employees who choose the participating employers’ plan. The anticipated outcome, aside from healthier, more satisfied employees, is greater employee retention.

“By partnering with Decisely, small businesses like auto repair shops can provide competitive benefits that attract and retain top talent, helping them succeed in today’s challenging market,” Dunn said.

He added that options such as Decisely are good ways to help small businesses in California offset rising healthcare expenses.

“While banding together for bargaining power isn’t an option, the SCRS individual employer captive program offers a compelling solution,” Dunn said. “By joining the SCRS program, small businesses gain access to quality healthcare plans at more affordable rates, typically saving about 16% versus their current health plans.”

Learn more about the health insurance plans available through SCRS.


Featured image by designer491/iStock

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