Insurance: Rising prices and job losses drive up the number of Americans without coverage.
December 23, 2001
By ROBERT A. ROSENBLATT, TIMES STAFF WRITER
WASHINGTON -- It's starting to feel as though the managed care revolution never happened.
As in 1992, health care expenses are rising faster than 10% a year. Employers are pushing more of the soaring costs onto their workers. And the recession is throwing millions of people out of work, costing them their health insurance as well as their paychecks.
As a result, just when it looked as if the nation was making headway on one of its most stubborn social problems, the number of uninsured Americans is surging again. But there are some big differences between now and the health care crisis of nearly a decade ago. And none of them bode well for the immediate future.
Unlike 1992, the nation is waging a war on terrorism, and government policymakers are showing scant interest in the twin problems of rising health costs and declining access to coverage.
Moreover, in 1992, businesses had a plan to rein in runaway health costs. They were moving most of their workers into health maintenance organizations and other managed care systems that tightly regulated where workers could get treatment and how much their insurance would pay.
Managed care slowed and finally reversed the growth in the number of uninsured, which fell from a peak of 44 million in 1998 to 38.7 million in 2000. But with costs rising again and more Americans without jobs, the tide of uninsured is rising again. No one knows by exactly how much, but the Kaiser Family Foundation calculates an increase of 1.7 million, enough to put the total back to more than 40 million.
Now that businesses have achieved the available savings from managed care, they must look elsewhere for relief. For now they are forcing workers to pay a greater share of their insurance premiums, higher deductibles and co-payments. But this merely shifts costs from one payer to another--from employers to employees.
Without a new strategy for containing health costs, politicians and health care experts alike are losing hope that the tide can be turned. That may be the biggest change since 1992.
Employer Learns Insurance Ins and Outs
At Polyfab Corp. in Sheboygan, Wis., President Rick Gill became an insurance expert and designed a new system himself after rejecting his insurer's proposed 66% price hike. "We just couldn't live with that kind of price increase," said Gill, whose company sells plastic parts to manufacturers in the food service industry.
Gill spent more than 100 hours educating himself about the insurance business and figured out how to bring down the cost increase to about 22% for the company and its 66 workers. Polyfab will pay $509 a month toward a family policy, up from $345 this year. Workers who choose to pick up the first $500 of medical bills themselves will pay $204 a month for their coverage, up from $153. Workers who take a chance with a $1,000 deductible will pay $121 a month--less than they pay now.
Workers at Hughes Electronics in El Segundo who belong to the Kaiser Permanente HMO elected to stick with the plan even though it is the most expensive offered by the company. They will pay $27.33 a week for the privilege, up from $16.21 this year.
"People seem to be willing to pay higher costs to stay in the plans they are familiar with," said Dr. Pamela Hymel, Hughes' vice president for medical services and benefits.
Like Polyfab and Hughes, companies big and small are pursuing their own strategies for coping with health costs. Some veterans of the struggle, however, think the problem may be too big.
"We just can't do it alone. We've got to reach out around the country and find other people with the same problems and try to do something on a national basis," said Bill Crist, president of the California Public Employees' Retirement System, which offers health insurance to workers at 1,350 state and local government agencies in California.
CalPERS is proud of its ability to buy good and affordable health care for its 1.2-million public employees and retirees and their families. But for next year, CalPERS was forced to swallow bigger co-payments for its members' prescription drug purchases.
So last month, CalPERS joined the National Coalition on Health Care, an alliance of big companies and unions that has long campaigned for a national solution to problems of health care costs and access. CalPERS is tacitly admitting that its ability to control costs, even as a big buyer, is severely limited, and that it wants a national debate on how to deal with the problem.
Nationally, employers have experienced insurance premium increases that reached 8.3% in 2000, are exceeding 11% this year and will hit 15% to 16% for many companies next year, said Joel Miller, the national coalition's research director.
Miller said such increases were intolerable when the general inflation rate was 3.3%. In a recession, he said, companies cannot simply pass their increased health costs on to their customers because they are liable to lose their customers.
In 1992, businesses dealt with the problem by switching to managed care. "We did the job we were asked to do, to provide affordable health care and make it possible for millions of people to get coverage," said Karen Ignagni, president of the American Assn. of Health Plans, which represents the HMO industry.
Economists estimate that managed care saved $300 billion during the 1990s. But consumers ultimately rebelled against its limits on their health care choices.
Tightly managed HMOs stopped growing, and the slack was taken up by "point-of-service" programs, which allowed patients to go outside the HMO network for a modest additional payment. Many consumers are now opting for even broader plans that let them bypass their primary care physician, who controls access to specialists in traditional HMOs, and go to specialists of their choice.
Hospitals joined the backlash too. They merged into megasystems able to use their own market power to demand concessions from the health plans and refuse cuts in reimbursements.
"There are no magic buttons to push" to control costs in the way that pushing people into HMOs worked in the 1990s, said Allen Feezor, director of health benefit services at CalPERS.
And to make things even worse, hospital spending is increasing. This may be a harbinger of rising demand by the baby boom generation, the 76 million people born from 1946 to 1964, Feezor said. Since the last cost crisis a decade ago, millions of boomers have moved into their 50s, when certain medical problems begin to surface: heart attacks, high blood pressure, chronic back troubles and some cancers.
Recession Dashes Hopes of Coverage for All
The growing recession has dashed hopes that the economy was finally in a position to extend health insurance protections to all 140 million American workers.
Now, with workers begging for jobs, many companies find that they no longer have to offer health insurance to attract good employees.
"As unemployment continues to rise, the number of Americans losing their health coverage is reaching epidemic proportions," said Ron Pollack, executive director of Families USA, a consumer advocacy group. Federal law entitles laid-off workers to maintain their health insurance, but they have to bear the entire cost themselves. Individual coverage usually runs about $2,500 a year, and a good family policy costs about $7,000.
The economic stimulus bill that stalled in Congress last week included a temporary federal subsidy of 50% to 75% for the health insurance costs of laid-off workers.
"We've been really frustrated the
last couple of years," said Crist of CalPERS. "We clearly need to bring
pressure on the government at the federal level and to raise the awareness
level of our representatives."
Copyright 2001 Los Angeles Times
Copyright 2001 Los Angeles Times