A few changes are coming in 2017 for employers who provide benefits to their employees, mostly in form of rate increases. Employers are also wondering what’s in store for the Affordable Care Act (ACA) in the coming year.

The Business Journal checked in with local insurance brokers for a forecast of what employers can expect, and to speculate on what changes the new presidential administration might bring.

Medical and benefit costs have been rising for a number of years, and individual rates have seen double-digit increase, said John Fradelizio, managing director, North Bay employee benefits, Wells Fargo Insurance Services. Employers can expect a 6 percent–8 percent rise in plan rates, driven partly by prescription drug rates, which have risen 12 percent–14 percent.

“It’s not popular with employees, but sometimes employers need to pass costs along to their employees,” Fradelizio said.

The North Bay, however, is fortunate to have more health plan options than before. Those new options include Western Health Advantage and Sutter Health who have both rolled out Kaiser Permanente-like HMO plans, he said.

“As new players, Western Health and Sutter are very price conscious and that’s encouraging. People like to have options. Anytime you add new choices is a positive thing,” Fradelizio said.

Victor McKnight, principal at EPIC Insurance in Petaluma, said the addition of Sutter Health and Western Health Advantage to the health insurance market are making a “huge impact” on local HMO plans.

“Kaiser is having to compete, and that’s a really good thing to see,” he said.

In 2016, small groups (under 100 employees) saw an increase in ACA compliance issues but are adjusting to the changes in reporting. Administrative costs associated with reporting have increased, however.

While there are small changes coming in 2017, 2018 will be very hard to predict.

“I’m pretty good at reading the tea leaves, but in 2018, but who knows what’s going to happen,” McKnight said. “I don’t think he (Donald Trump) will repeal the ACA, but he could defund it, which would be very problematic.”

We could see a positive impact, however, if Trump gets rid of the ACA reporting requirements, or makes it easier.

“It would be a relief in the compliance area. He could make quick changes and impacts we can’t foresee. A lot of it is unknown,” McKnight said.

With a new president, whose political party has threatened to repeal the ACA, the entire program will likely not be repealed, said Mike Parr, employee benefits consultant at George Petersen Insurance Agency Inc. in Santa Rosa. The administration could, however, make modifications to increase options and reduce costs, especially for drugs.

“Somehow the federal government needs to get involved to bring costs down,” he said.

Parr speculates there are other factors having to do with the ACA that are contributing to the increase in rates.

“My hypothesis is that high costs are partially due to the Affordable Care Act. In the past, insurance carriers could decline individuals. With the passage of the ACA they had to accept everyone, even the elderly and those with health issues. Paying out claims for those individuals has trickled down into group sponsors.”

Those that have it tough are rural businesses where there is no competition. North and west of Cloverdale all that is available is Blue Cross or Blue Shield, who have raised their rates 10 – 20 percent in the small group category, said Parr.

“Blue Cross is not very interested in the small group (those with under 100 employees) PPO, with fixed, non-negotiable rates. It’s really tough for folks who don’t have access to an HMO plan,” he said, speaking about clients in Fort Bragg. “Some are even dropping their insurance and adding bonuses for employees to get their own insurance.”

That practice, however, is not recommended.

“Group is the better option, it gets you richer benefits and makes you more attractive as an employer,” Parr said.

Parr is hopeful that by the middle of 2017 rates will start to go down. With ever-increasing penalties for mandated coverage, he hopes more youthful and healthy individuals will enroll so the individual pool will get healthier and the insurance industry will not see so many claims.

Also bringing costs down are electronic health records which reduce administrative costs of paper and faxing, and insurance apps that allow users to self-administer and are linked with payroll, streamlining the process to administer benefits.

Here’s what Arrow Benefits Group is telling their clients with concerns about the coming year:

Employees have questions about the status of their health plans should President Elect Trump, along with the Republican-controlled House and Senate, make good on his promise to “Repeal and Replace” Obamacare. There are so many facets to Obamacare, many of which are mundane and not controversial, that is would appear likely that the ultimate replacement plan would include many other features currently found in Obamacare. We expect this will take time, so for now we will continue to work as if nothing has changed until something does in fact change. We will keep our clients informed of pending changes as we learn of them.

Cynthia Sweeney covers health care, hospitality, residential real estate, education, employment and business insurance. Reach her at Cynthia.Sweeney@busjrnl.com or call 707-521-4259.