Roughly 63% of all uninsured workers are either self-employed or work for firms with fewer than 100 employees, and only 47% of businesses with fewer than 500 employees offer health insurance, down from 58% in 1997. How can entrepreneurs ease the pain for themselves and their employees?
Mountain View, Calif.-based eHealth (nasdaq: EHTH - news - people ), an online health insurance brokerage, is trying to offer at least a smidge of relief with something called BusinessHSA. The new Web-based system lets employers set aside pre-tax contributions to employees' health savings accounts (HSAs), thus helping to defray costs while not offering a full-scale health benefits program. The service also gives employers a chance to help educate employees befuddled by the tortuously complicated health care market.
Monday, June 30, 2008
Friday, June 27, 2008
How Technology Can Help Trim Auto Insurance
By M.P. MCQUEENJune 26, 2008; Page D1
For years, drivers paid less for auto insurance if they reported low mileage. Now, insurers are using high-tech devices to track customers' habits, and offering deep discounts to those who not only drive less, but also cautiously.
In the U.S., Progressive Corp. and GMAC Insurance, a unit of GMAC Financial Services, are the first and the largest companies to roll out this type of plan. At least two smaller companies, including Unigard Insurance Co. of Bellevue, Wash., a unit of QBE Insurance Group of Australia, also are poised to start similar ones soon. Companies in Canada and Italy also have programs, and Hartford Financial Services Group Inc. is testing the same technology in Connecticut.
Drivers who participate in these plans have devices installed in their cars that, depending on the technology used, can track the number of miles driven, the speed at which cars are driven and even how often and how hard the brakes are used. By allowing their habits behind the wheel to be monitored, drivers get lower insurance rates -- or pay higher premiums if they're lead-footed road hogs.
Usage-based insurance pricing would mean an estimated two-thirds of households would pay less in premiums than they do now, according to a report by the Hamilton Project at the Brookings Institution, a think tank. Researchers Jason Bordoff and Pascal Noel calculated average savings at about $270 per car, per year. Some analysts and insurers believe that after a slow start, usage-based insurance could take off now that higher gas prices are forcing consumers to drive less anyway.
Proponents of these plans say they also have the potential to help ease traffic tie-ups and reduce carbon emissions by rewarding customers for driving less. Fewer miles on the road also means fewer accidents -- and fewer claims for insurers. With pay-as-you-drive insurance, drivers in the U.S. would reduce their mileage by about 8%, with $51.5 billion in social benefits mostly from reduced congestion and accidents, according to the Hamilton Project.
Later this month, Progressive says it will re-launch and expand its program, formerly known as "TripSense." Currently available only in Michigan, Minnesota and Oregon, TripSense subscribers get a special device that plugs into their car's diagnostic port -- the place mechanics plug into when troubleshooting. The Progressive device, however, keeps track of when, how far, and at what speed the car is driven. Every six months, drivers must remove the device and upload stored information to a computer and send it to the company.
When Progressive's new usage-based program, known as "MyRate," is launched, the technology will require less driver effort. This program uses a telematic device, which gathers driver data and wirelessly transmits it over a cellphone network. Progressive says it will also track how often and how hard drivers brake and use the braking information when calculating rates. This system doesn't include a global positioning system, so it won't track a driver's whereabouts. Drivers get back a periodic report that tells them how many miles they've logged and other feedback about their driving habits. Based on the data, they'll receive discounts ranging as high as 60%, depending on the state.
Bad-Driving Surcharge
But the device could raise rates for some drivers. In some states where it's permitted by law, drivers would be assessed a 9% surcharge for logging excessive miles or driving at high speeds with hard braking, said Richard Hutchinson, a general manager for Progressive.
Progressive, which has 7.1 million auto policies in force nationally, says 34% of its customers in Michigan, Minnesota and Oregon who signed up via telephone or Internet (instead of their agent) have been choosing the usage-based programs since 2004. The new plan is expected to be available in six more states by the end of this year and will also be sold by independent agents, the company said.
Brandon Biniecki, a 23-year-old information-technology support technician in Monroe, Mich., says he signed up for Progressive's usage-based program in 2006 for his Chevy Cobalt, a compact car. He drives less than 18,000 miles a year and currently receives a 5% or 10% discount from the company every six months, he says. Mr. Biniecki says he doesn't mind being monitored in return for saving money, but admits he might not have signed up if a global positioning system, or GPS, was involved.
"That would be an invasion of privacy, with someone being able to know where I am at any given point in time," he says.
OnStar
GM's OnStar technology, shown here, is used to gather driving data.
Other insurers include GPS in their monitoring devices. GMAC Insurance's Low-Mileage Discount Program with OnStar, which expanded to a total of 34 states last year, grants discounts to users of vehicles equipped with GM's GPS and communication systems. The company says that enrollments have increased 200% since last year, and that customer retention rates are higher for those using the device.
In order to receive a discount, the driver must subscribe to OnStar, which is generally free for the first 12 months to buyers of new GM cars, and costs $199 to $299 annually after that. New customers who agree to have odometer readings sent directly to GMAC Insurance will earn a 26% discount if they drive less than 15,000 miles annually. (Existing drivers earn discounts based on their actual mileage.) Even heavy drivers can still earn a 5% to 8% "safe driver" discount just for subscribing to the service. Low-mileage discounts increase in tiers as fewer miles are logged. For instance, someone who drives less than 2,500 miles a year can qualify for a 54% discount.
'I Didn't Believe It'
Don West, 74, a real-estate broker in Gresham, Ore., says he reluctantly switched his coverage to GMAC Insurance, leaving his longtime agent, a personal friend. Because he and his wife drove less than a combined 15,000 miles a year, their rate plummeted. Says Mr. West: "I was paying $2,000 a year in premiums for the Cadillac and the Hummer, and it dropped the premium the first year I was on GMAC to $886 dollars. I didn't believe it at first."
About 20,000 drivers currently participate in the GMAC low-mileage program with OnStar, says John O'Donnell, vice president of business development at GMAC Insurance, out of five million OnStar clients.
At this point, OnStar only relays odometer readings to GMAC Insurance, Mr. O'Donnell said. OnStar doesn't continuously track drivers' location and only pinpoints a car's whereabouts at certain times -- when the device is activated by a crash or the police receive a stolen-vehicle report, for example. "There is an opportunity to get other information, and as we do we will be able to correlate risk to actual driving behavior itself rather than more predictive factors," Mr. O'Donnell says.
For years, drivers paid less for auto insurance if they reported low mileage. Now, insurers are using high-tech devices to track customers' habits, and offering deep discounts to those who not only drive less, but also cautiously.
In the U.S., Progressive Corp. and GMAC Insurance, a unit of GMAC Financial Services, are the first and the largest companies to roll out this type of plan. At least two smaller companies, including Unigard Insurance Co. of Bellevue, Wash., a unit of QBE Insurance Group of Australia, also are poised to start similar ones soon. Companies in Canada and Italy also have programs, and Hartford Financial Services Group Inc. is testing the same technology in Connecticut.
Drivers who participate in these plans have devices installed in their cars that, depending on the technology used, can track the number of miles driven, the speed at which cars are driven and even how often and how hard the brakes are used. By allowing their habits behind the wheel to be monitored, drivers get lower insurance rates -- or pay higher premiums if they're lead-footed road hogs.
Usage-based insurance pricing would mean an estimated two-thirds of households would pay less in premiums than they do now, according to a report by the Hamilton Project at the Brookings Institution, a think tank. Researchers Jason Bordoff and Pascal Noel calculated average savings at about $270 per car, per year. Some analysts and insurers believe that after a slow start, usage-based insurance could take off now that higher gas prices are forcing consumers to drive less anyway.
Proponents of these plans say they also have the potential to help ease traffic tie-ups and reduce carbon emissions by rewarding customers for driving less. Fewer miles on the road also means fewer accidents -- and fewer claims for insurers. With pay-as-you-drive insurance, drivers in the U.S. would reduce their mileage by about 8%, with $51.5 billion in social benefits mostly from reduced congestion and accidents, according to the Hamilton Project.
Later this month, Progressive says it will re-launch and expand its program, formerly known as "TripSense." Currently available only in Michigan, Minnesota and Oregon, TripSense subscribers get a special device that plugs into their car's diagnostic port -- the place mechanics plug into when troubleshooting. The Progressive device, however, keeps track of when, how far, and at what speed the car is driven. Every six months, drivers must remove the device and upload stored information to a computer and send it to the company.
When Progressive's new usage-based program, known as "MyRate," is launched, the technology will require less driver effort. This program uses a telematic device, which gathers driver data and wirelessly transmits it over a cellphone network. Progressive says it will also track how often and how hard drivers brake and use the braking information when calculating rates. This system doesn't include a global positioning system, so it won't track a driver's whereabouts. Drivers get back a periodic report that tells them how many miles they've logged and other feedback about their driving habits. Based on the data, they'll receive discounts ranging as high as 60%, depending on the state.
Bad-Driving Surcharge
But the device could raise rates for some drivers. In some states where it's permitted by law, drivers would be assessed a 9% surcharge for logging excessive miles or driving at high speeds with hard braking, said Richard Hutchinson, a general manager for Progressive.
Progressive, which has 7.1 million auto policies in force nationally, says 34% of its customers in Michigan, Minnesota and Oregon who signed up via telephone or Internet (instead of their agent) have been choosing the usage-based programs since 2004. The new plan is expected to be available in six more states by the end of this year and will also be sold by independent agents, the company said.
Brandon Biniecki, a 23-year-old information-technology support technician in Monroe, Mich., says he signed up for Progressive's usage-based program in 2006 for his Chevy Cobalt, a compact car. He drives less than 18,000 miles a year and currently receives a 5% or 10% discount from the company every six months, he says. Mr. Biniecki says he doesn't mind being monitored in return for saving money, but admits he might not have signed up if a global positioning system, or GPS, was involved.
"That would be an invasion of privacy, with someone being able to know where I am at any given point in time," he says.
OnStar
GM's OnStar technology, shown here, is used to gather driving data.
Other insurers include GPS in their monitoring devices. GMAC Insurance's Low-Mileage Discount Program with OnStar, which expanded to a total of 34 states last year, grants discounts to users of vehicles equipped with GM's GPS and communication systems. The company says that enrollments have increased 200% since last year, and that customer retention rates are higher for those using the device.
In order to receive a discount, the driver must subscribe to OnStar, which is generally free for the first 12 months to buyers of new GM cars, and costs $199 to $299 annually after that. New customers who agree to have odometer readings sent directly to GMAC Insurance will earn a 26% discount if they drive less than 15,000 miles annually. (Existing drivers earn discounts based on their actual mileage.) Even heavy drivers can still earn a 5% to 8% "safe driver" discount just for subscribing to the service. Low-mileage discounts increase in tiers as fewer miles are logged. For instance, someone who drives less than 2,500 miles a year can qualify for a 54% discount.
'I Didn't Believe It'
Don West, 74, a real-estate broker in Gresham, Ore., says he reluctantly switched his coverage to GMAC Insurance, leaving his longtime agent, a personal friend. Because he and his wife drove less than a combined 15,000 miles a year, their rate plummeted. Says Mr. West: "I was paying $2,000 a year in premiums for the Cadillac and the Hummer, and it dropped the premium the first year I was on GMAC to $886 dollars. I didn't believe it at first."
About 20,000 drivers currently participate in the GMAC low-mileage program with OnStar, says John O'Donnell, vice president of business development at GMAC Insurance, out of five million OnStar clients.
At this point, OnStar only relays odometer readings to GMAC Insurance, Mr. O'Donnell said. OnStar doesn't continuously track drivers' location and only pinpoints a car's whereabouts at certain times -- when the device is activated by a crash or the police receive a stolen-vehicle report, for example. "There is an opportunity to get other information, and as we do we will be able to correlate risk to actual driving behavior itself rather than more predictive factors," Mr. O'Donnell says.
Thursday, June 26, 2008
Uninsured % Lowest in New England States
The New England states have the highest rate of health insurance coverage in the United States, while the Southwestern part of the country has the lowest rate of coverage, according to a recent study.
Only 11% of adults and 4% of children in New England are uninsured, compared with 30% of adults and 18% of children in the Southwest.
Nationally, about 17 % of Americans under age 65 were uninsured when the survey of 106,000 families was conducted from 2004- 2006.
Wednesday, June 25, 2008
Health Insurance Mandates Unhealthy
Health insurance costs are rising faster than Massachusetts businesses can afford and still, MA policymakers are considering measures that would push them even higher.
The House will consider a bill that would mandate unlimited coverage of mental health services, even though Massachusetts’ current mandate is among the most generous of any state in the nation.
Already, Massachusetts ranks among the states with the most mandated health benefits. While a case can be made for any one mandate, together they add significantly to the cost of health care.
When health insurance costs go up, employers bear the bulk of the increase, which leaves less money for companies to grow their businesses and create new jobs. This is particularly true for small businesses.
With health-care costs continuing to rise at double-digit rates, solutions need to focus on controlling those costs, not piling up more costs on employers.
Auto Insurance Fraud
From KPSP Local 2 News
California's Insurance Commissioner is warning drivers to be on alert for scam artists who stage auto collisions. It's a costly and potentially form of auto insurance fraud. One such scam, nicknamed the swoop and squat happens when two or three vehicles work as a team, to set up an "accident." The lead car cuts the victim off, and another car pulls up alongside the victim, so he/she has no choice but to rear-end the scam artist.
Insurance Commissioner Steve Poizner says even if no one gets hurt, insurance fraud hurts the consumer, in the form of higher auto insurance rates. He says, "Insurance fraud is like a $500 tax on every man, woman and child in California." Poizner says auto insurance fraud is a major part of the problem. The California Department of Insurance investigated 14,565 suspected automobile insurance fraud cases in 2006 and 2007.
Homeowners Insurance Rates in Texas
Texas has the highest home insurance rates in the nation, but rates can vary widely for different carriers. Comparing policies for a $100,000 home found that homeowners insurance premiums ranged from $500 to $1,200.
Despite the fact that Texas has had good weather since Hurricane Rita hit its coast three years ago, the state has not been able to draw enough companies to make the market more competitive.State Farm, Allstate and Farmers Insurance control about 60% of the market, and if USAA and Travelers are added to the list, that's about 71 percent of the market share.
Insurance costs have either gone down or remained the same since the Legislature approved an insurance reform bill in 2003.
Tuesday, June 24, 2008
Individual Health Insurance in California
Individual health insurance rates for some California residents are going up 10 or 11 percent next year.
Jeff Aran has bought his own HMO policy from Kaiser Permanente since the mid-1980s. The last few years he's noticed his premiums are consistently 2 percent or 3 percent above the health insurance rates that the California Public Employees' Retirement System gets from the same Oakland-based health maintenance organization (Kaiser Permanente).
Aran and the 2.5 million Californians like him who buy individual health insurance may one day look back on 10% rate hikes as the good old days.
Individual & family policyholders have enjoyed slower premium increases from recent trends that have tamed medical costs a bit.
Baby boomers are generally healthier than previous generations and lower-cost generic drugs have flooded the market. The wave of health insurance company mergers that swept the industry a few years ago has abated. Negative press has also put some pressure on health insurers to hold down premiums.
Individual health plan policy owners will be hardest hit. Health care insurers don't make much money on individual plans, which cost more to administer, he said. As a result, the insurers are more likely to significantly raise those premiums when times get tight.
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