After thinking about it, I wonder if it is due to small size of the retiree pool.
Megacorp has 3 groups of employees: Those who receive subsidized retiree coverage, those who receive unsubsized retiree coverage and those who receive no retiree coverage.
As time goes on, there are fewer and fewer people in groups 1 and 2. As they go onto Medicare and there dependents either go on Medicare (spouses) or grow up and get their own coverage (children), the retirees eligible for retiree coverage gets to be a smaller and smaller group.
Also, it is hard to imagine anyone paying for the unsubsidized retiree coverage. The unsubsidized cost for 2015 would be $1341 a month for a retiree and children. That is probably pretty comparable to ACA exchange costs -- if not more -- and there is a chance there of a subsidy (if eligible).
So, I imagine for a lot of people the unsubsidized coverage is no longer attractive. For just a retiree (no spouse) the unsubsidized cost is $745 a month.
So - as time goes on - I think the people with unsubsidized coverage are going elsewhere. And, all employees with retiree coverage are getting to be a smaller group due to people aging out of coverage. So, any large claims will have a huge impact on premiums given the small size of the group.
Megacorp said that they realized that the cost increases are not sustainable and they are looking into what to do about it. In the letter, they say are going to look into private exchanges so as to have a larger insured pool. So, that suggests to me that my explanation for the huge increases is probably correct -- small size of shrinking pool.