ColoradoBiz - Rays of hope: health costs and health-insurance premiums are still on the rise, but 2006 increases are smaller than last year’s

Although health care costs are rising, local insurance companies and employers say there is reason to be optimistic about a problem that has had even the national experts stumped for years. “The increases we’ve seen have been less than in prior years,” says Joe Hoffman, vice president and general manager for Anthem Blue Cross and Blue Shield of Colorado and Nevada.
“In the late 1990s and early 2000s, we saw percentage increases in the high teens and twenties, and sometimes in the thirties. Now the increases are in the double digits or high single digits.”

Related Results

Health-Insurance Crisis LoomingHow To Cope With The Health-Insurance BluesBest And Worst States For Health-Insurance CostsThe health-insurance headache: Chamber’s white paper offers remediesUnderstanding Health-Insurance Coverage of Low-Skilled Workers in the US and…

Dave Uppinghouse, senior vice president of employee benefits for Van Gilder Insurance Corp, agrees that recent cost trends are good news. “I think we are seeing some encouraging signs,” he says. “I would generally say we are seeing stabilizing effects.” The 101-year-old Van Gilder Insurance Corp. is the largest independent insurance brokerage firm in the Rocky Mountain region.
Uppinghouse says 2006 premium increases will be lower than last year. Employers with fewer than 50 employees will see an average rise in premium costs of 12 to 18 percent for 2006. “That’s down a few points from a year ago, so it’s showing signs of going in the right direction,” he says. Companies with 50 to 500 employees will see increases of 8 to 10 percent, and the largest companies will see 5 percent increases.
Uppinghouse says one reason for the smaller increases is that consumers are becoming smarter about their prescription drug purchases. He says a prescription this year will cost about 10 percent more than the same prescription last year, but those costs might go down as more generics hit the market.
Kate Paul, President/CEO of Delta Dental Plan of Colorado, is a little less optimistic about rising costs. She says estimates from the Centers for Medicaid and Medicare Research (of the U.S. Department of Health and Human Services) indicate that health care will be 20 percent of the U.S. gross domestic product by 2015, which she calls “very worrisome.”
“With the growth in health care capacity within the state I only see costs continuing to rise,” she says. “There is no real relief in sight.”
Insurers and employers offer consumers opportunities to help keep costs level. Hoffman points to programs such as Anthem’s radiology management program, which helps cut down on duplicate tests. For example, instead of undergoing a CT Scan and MRI, the patient can get the MRI, which he says would show a decisive result.
Hoffman says consumer-driven health plans can also help reduce costs. The plans combine a high-deductible medical plan and an employer-funded reimbursement account. The plans can save money for employers by shifting more costs to employees, who in turn get more choices in their care.
CDHPs haven’t exactly taken off, Hoffman says, but he predicts they will.
“We’re seeing a lot of interest in individual plans, in small group plans, and also the largest employers are adding them as an option and seeing some reasonable participation in those programs,” he says. “We’re seeing steady growth in them.”
He adds that Anthem offers EmployeeElect, a new plan that has some elements of CDHPs. Consumers can choose high deductibles with low premiums or low deductibles with high premiums.
Uppinghouse also says CDHPs will help keep premium costs down. The key will be to educate consumers about the plans’ benefits. “Insurance companies are coming out with better communication tools to give consumers better information on price and quality,” he says. He also thinks insurance companies and employers should offer employees this information before open enrollment, when consumers make quick decisions about their employer-sponsored healthcare. “I think people are starting to become more cost conscious. This isn’t going to be a quick fix to problems, but it offers one ray of hope for the future, because it has us more engaged.”
Industry experts see education and communication, not state legislatures, as a possible source of relief for the high costs of health care. “The (Colorado) legislature has good intensions, but it’s creating more work than they think they’re fixing,” Hoffman says. More work for providers means more paperwork, and thus higher costs.
Colorado legislators are considering dozens of health care related bills, ranging from reforms for the Medicaid system to whether a health-care provider should inform the patient about the duty to report certain conditions to the health department.
Paul doesn’t look to the state either. “I doubt that any significant relief will come from the state this year,” she says. “There will be some tinkering with financing related issues and some attempts to control costs, but real cost relief will need to come from a systematic revisiting of how health-care costs are incurred.”
Donna Lynne, president of Kaiser Permanente Colorado, agrees that employers can reduce costs by helping employees prevent illness–and that insurers and providers can help out. “Health care is about much more than just providing care to people when they are sick–it is also about taking care of them before they get sick,” says Lynne.