Historically, companies have offered dental insurance coverage to their employees as part of a competitive benefits package. But increasing costs and changes in the way people purchase health care are having profound effects on dental insurance in the state and may have many people ultimately going it alone.
In 2007, the most recent data available, just over 48 percent of annual dental expenses nationally were paid for by private insurance, with the mean cost amounting to about $643 per year, according to a study by the Dental, Oral, and Craniofacial Data Resource Center. Some say that percentage will likely drop as costs rise and federal health reform provides access to health exchanges. The cost of dental services is expected to jump an average of 5.5 percent per year to reach an annual expenditure of $126.3 billion by 2013, according to a June 2011 article in Dental Economics. That represents an 80 percent increase in total expenditures for dental services.
The number (of dental insurance policies) covered by employers is probably decreasing and the number of people without insurance is probably increasing, says James Williamson, executive director of the NH Dental Society. And though he has no statistics, he says anecdotally he's heard only one reason for this. Cost. That's probably the only reason I've heard. I think everybody sees [dental insurance] as a value. And I think employees see it as an added value to employment, but companies are picking and choosing. If they have a choice between general health insurance coverage and dental, they are probably putting more toward health insurance.
Changing Dental Landscape
Northeast Delta Dental, the state's largest insurer, covers 741,000 people in NH, Maine and Vermont. Of those, 10,000 hold individual policies with the number growing by a few hundred each year, says President and CEO Thomas Raffio. Once the health exchange provision of the Affordable Health Care Act takes effect in 2014, Raffio expects the coverage to steadily shift. It's not going to be precipitous, it's not going to be overnight, but over time we'll probably see about 30 percent of employers will start dropping their dental coverage, Raffio says.
Sadler Insurance is one of those employers still offering dental insurance. It's not something we ever considered deleting, says Arthur Bruinooge, president of Sadler Insurance Agency in Nashua, of dental insurance. (Employees) appreciate it, it's part of the overall package.
Others, needing to watch costs, don't offer the coverage. That was the case for Val Zanchuk, president of Graphicast Inc., a 29-person graphite mold casting firm in Jaffrey. We don't offer dental insurance. We've looked at it in the past, but the cost compared to the benefits never made financial sense, he says. Instead, after one of the dental insurance reviews, we did decide to contribute $500 yearly to each employee's flex[ible] spending account. This is in addition to their personal contribution. The employees are free to use the money for any medical purpose, but we did announce it as a medical benefit in lieu of dental insurance.
That said, when employers have to make tough choices about insurance, dental sometimes wins out because of its lower price tag. With pressure on medical premiums some employers are looking to dental and vision lines as something they can continue to offer, says Bob Benedetto, director of small group sales for Anthem Blue Cross and Blue Shield. Benedetto says Anthem has seen a 2 to 3 percent increase on average in dental policies year over year.
Besides Delta Dental and Anthem, other insurers in NH offering dental include Cigna and MetLife. (See Sidebar on page 34 for list.) Harvard Pilgrim partners with Delta Dental to set up dental insurance for its clients.
A Growing Retail Market
Offering more individual plans means higher administration costs for insurance companies, and they can be time consuming when an insurer must explain how they work to numerous individuals rather than businesses.
And since dentists are reimbursed by Northeast Delta Dental 90 cents for every dollar, Delta does not have much wiggle room in reducing its costs, leaving the company trying to prevent passing potential price increases to consumers.
Costs are also based on usage, and with more individual coverage, there will be more usage. Raffio says that is because currently, for every hundred employees with dental insurance, only 80 actually use the insurance. However, of those who purchase individual insurance, 100 percent of those people will use it.
People really don't want to pay that much per month for dental insurance, Raffio says. Currently a basic policy, which covers all preventative care and portions of fillings and major dental work, runs a person in a group policy about $40 per month. For an individual it's about $50.This works out to about $600 per year. But most people, particularly younger people, will only get two cleanings a year, which runs about $200, Raffio says.
He says at these prices people ultimately start to self-insure, paying out of pocket for the cleanings and not expecting they'll need any major work. What people don't realize, says Raffio, is as they age, they most likely will need major work. We just have to keep educating people.
This means reminding people that oral health is essential to overall health. And in the meantime, insurers are preparing for a new dental insurance field. Some experts think that employers will keep dental as a kind of competitive thing, Raffio says. My theory is that once a well-known company that is known for being good to their employees drops their coverage it will kind of legitimize the concept. I think you will see others, particularly smaller companies, start to drop their coverage. N
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