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Diseases are often referred to as epidemics, but health care costs now fall into that category. Millions of Americans aren’t covered by insurance -- because they can’t afford it, or their employer can’t afford to offer it.
Health care spending is expected to double to $4 trillion by 2016 and consume almost 20 cents of every dollar spent, according to the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS). Consumers’ out-of-pocket spending on health care could be as high as $440 billion by 2016.
“As the nation moves from more traditional sources of insurance, such as employer-based coverage to more federal- and state-provided health care, we will continue to face tough questions about how we finance our health care bill,” said John Poisal, deputy director of the National Health Statistics Group at CMS.
CMS also expects prescription drug spending to increase an average of 8.6 percent annually until 2016.
‘The Illusion of Coverage’
Even those who are covered still face financial woes. Sickness or injury can leave people in serious financial jeopardy, even with health insurance, according to a report by the Access Project, a research affiliate of the Schneider Institute for Health Policy at Brandeis University in Waltham, Mass. “The Illusion of Coverage: How Health Insurance Fails People When They Get Sick,” found widespread debt among the insured.
Health care costs are escalating faster than wages and inflation.
“Health plans that keep premiums down by instituting high deductibles and scaled-back coverage don’t address the underlying problem of rising costs,” said Carol Pryor, senior policy analyst at the Access Project. “Instead, these plans shift costs onto consumers, leaving them vulnerable to financial and access problems when they need insurance the most.”
The report calls for states to require insurers to file requests for premium increases and hold public hearings on the requests. Requests should be evaluated with respect to insurers’ efficiency and resources. The report also suggests insurance companies provide consumers with standard disclosure forms that clearly detail the services covered and the out-of-pocket expenses for which consumers are liable.
Grower options
When employers are fortunate enough to offer health insurance to employees, they’re constantly fighting rising premiums. Natchez Trace Greenhouses in Kosciusko, Miss., offers insurance, but it’s had to change companies several times during the last five years because of rising costs, policy changes and when one provider declared bankruptcy, said Lori Hitchcock, president of Natchez Trace Greenhouses. The greenhouse employs 35 people, and eight of them signed up for the insurance. The bulk of the employees “just can’t handle the cost,” Hitchcock said, despite the company looking for better prices and providing good wages.
If insurance premiums continue to increase at the current pace, no one will be able to afford it, said Kenny Stewart, owner of Stewart’s Greenhouse in
“Read the fine print. In our area, we have two hospitals, but they don’t accept all of the insurance options from the carriers,” Stewart said. “What’s happening in the insurance industry is disheartening.”
The Florida Nursery, Growers and Landscape Association has spent a lot of time looking for ways to provide members with health insurance, said Jennifer Nelis, director of membership at FNGLA.
“So far it’s cost-prohibitive, but we haven’t closed the door on it yet,” Nelis said. “It’s expensive to get insurance in Florida, and we want to find a good a la carte policy for members. A lot of members are facing a crisis in terms of insurance because they can’t afford to offer it to their employees.”
Members of the San Diego County Flower & Plant Association can receive health insurance through the Western Growers Association. It offers both the Blue Cross of California network and the Las Californias Benefit Plan in Tijuana, Mexico.
“Trying to get affordable insurance for our members was a major goal,” said Jan Berry, executive secretary of the San Diego County Flower Growers Association. “With both plans available, it offers the best of both worlds and keeps it affordable.”
Rates start at $72 per month of employee coverage, and plans include vision and dental.
The uninsured
If you can’t afford to provide health insurance to your employees, you’re not alone. Decreases in employer coverage were deepest among employees working in smaller companies -- those with fewer than 25 employees, according to the Kaiser Commission on Medicaid and the Uninsured. By 2005, nearly 15 percent of employees had no employer-sponsored insurance (ESI) available to them, either through their own job or that of a family member’s, which represents an increase of 2.5 percent from 2001, according to the commission.
Almost 45 million people, or 15.3 percent of the population, were without health insurance in 2005, according to the U.S. Census Bureau. However, some 249 million of Americans had coverage.
Legislators look for relief
Sen. Mike Enzi, R-Wyo., the ranking member of the Senate Health, Education, Labor and Pensions Committee, plans to introduce legislation to allow small businesses, trade associations and local union employees to band together for affordable group health insurance.
“In just five years the average cost of employer-based family coverage has nearly doubled, from $4,248 to $8,167 per family, creating an ever-widening gap between the haves and haves not,” Enzi said in a released statement. “By allowing small business groups and working families to pool their members, we can reduce the cost of health insurance, expand access to health care and reduce the number of uninsured Americans.”
Sens. Blanche Lincoln, D-Ark., and Richard Durban, D-Ill., are working on legislation that would create a government-administered Small Employers Health Benefit Program. Rep. Paul Ryan, D-Maine, introduced H.R. 914, the Tax Equity and Affordability Act, to provide an annual advance tax credit to assist workers without employer-based health insurance.
Former Massachusetts Gov. Mitt Romney last year signed into law the state’s health care reform plan. By Dec. 31, 2007, all
Two sides of AHPs
While legislators and groups tout association health plans (AHPs), a study from Georgetown University concluded AHP legislation would lead to more health insurance scams.
States have the authority and resources to prevent, identify and shut down fraudulent insurers, but these same tools would not apply at the federal level under the AHP legislation, said Mila Kofman, the study’s author.
The Heritage Foundation, a
“Both the traditional AHPs and the proposed expanded AHPs would be amendable to insurance pooling and purchasing techniques that would increase coverage options,” said Nina Owcharenko, senior policy analyst for health care at the Heritage Foundation. “If done correctly, and in combination with other efforts, they have the potential to help transform today’s health care system into one that is more consumer oriented.”
Other options
There are some consumer-directed health plans available to help small-business owners and their employees.
* Health savings accounts. HSAs are tax-free savings plans that allow employees to pay for current health care costs while saving for future medical expenses. Participants are not penalized for using their HSA funds for qualified medical expenses and may carry over any unused funds to the next year. Both employers and employees may contribute to an HSA, and it can move with the employee in the event of a job change.
* Health reimbursement arrangements. HRAs are employer-funded accounts that reimburse employees for qualified medical expenses. After employees have paid for expenses out-of-pocket, they submit a claim and are reimbursed from money their employer has set aside for that purpose.
* Flexible spending accounts. FSAs are designed to let employees save pretax dollars to use later for co-pays, deductibles and other medical expenses not covered under their main health-insurance plan. The IRS requires you forfeit any unused account balances remaining at the end of the year, making this less attractive than some other savings accounts such as HSAs, which allow you to carry over unused funds from year to year.
Another option is a professional employer organization (PEO). PEOs provide four services through co-employment: Human resources, benefits administration, payroll administration and risk management. But do your research on PEO relationships, said Lauraine Bifulco, president of Vantaggio HR Ltd., a human resource and management consulting firm in Aliso Viejo, Calif.
“PEOs have become popular as companies search for ways to decrease their administrative burden and the liability associated with hiring employees,” Bifulco said. “But PEOs are often misunderstood.”
Keep in mind that your company and the PEO are both liable for all aspects of the employment relationship. Also consider that this new relationship may change your status in terms of compliance issues, she said.
“If you join a PEO, you may have to offer family medical leave. Many labor laws are based on the number of employees you have on staff,” she said.
PEOs will not likely provide small companies with health insurance savings, according to Bifulco.
“You’re likely to benefit more on the worker’s comp side, rather than health insurance,” she said. “With benefits packages, small companies can offer competitive benefits if they take the tie to shop around. Consult with a knowledgeable insurance broker who will market your company’s needs at no cost to you.”
For more: Natchez Trace Greenhouses, (662) 289-2221; www.natcheztracegreenhouses.com. Stewart’s Greenhouse, (352) 383-8280; stewartsgrhs@aol.com. FNGLA, (800) 375-3642; www.fngla.org. San Diego County Flower & Plant Association, (760) 431-2572; www.flowerandplant.org. Vantaggio HR Ltd., (949) 425-1262; www.vantaggiohr.com.
Wal-Mart expands $4 generic drug program
After an extremely positive response, all U.S. Wal-Mart pharmacies now offer the $4 generic prescription program.
The program includes 331 generic prescriptions available for up to a 30-day supply at commonly prescribed dosages.
Between Sept. 21 and Nov. 12, 2006, as the first 27 states were added to the program, 2.1 million more new prescriptions were filled in those states compared to the same time period in 2005.
Company ties income to health score
WellPoint Inc., a health benefits company in
WellPoint is the first health benefits company to directly link success in improving the health of its members with the compensation of every associate in the company.
WellPoint’s MHI is made up of 20 clinical areas that reflect the quality of care an individual has received. These measures focus on prevention and screening, care management, clinical outcomes and patient safety. The measures will be combined in a proprietary statistical model to determine the quality of health care the company’s members receive year after year.
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For members who have diabetes, the index will help to measure if they are getting necessary eye exams, maintaining their blood sugar level to reduce complications and controlling their blood pressure level.
A portion of all WellPoint employees’ incentive income will now be tied to improvements in the member’s health index score.
- Kelli Rodda
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Health care squeezes the middle class
Diane Rowland, executive vice president of the Henry J. Kaiser Family Foundation
A growing number of Americans -- 46 million in 2005 and increasing each year -- lack health insurance to help them address their health care needs. Leaving 46 million Americans without health coverage not only compromises their health but also puts a growing burden on our health care system and adds additional strain to our economy.
And, even for those with health coverage, rising premium costs, the increasing out-of-pocket costs from more limited coverage, and decreasing availability of employer-based coverage make obtaining and paying for health care an increasing financial burden. For many, health insurance coverage through the workplace now has higher deductibles and more cost-sharing as well as higher premiums.
When insurance is offered, it is becoming increasingly unaffordable for many. From 2000-2006, the cumulative increase in premiums for employer-sponsored insurance was 87 percent compared to a 20 percent increase in wages and 18 percent increase in overall inflation.
The average annual family premium reached $11,480 in 2006, and the average family contribution was $2,973. This means a family earning $40,000 in 2006 would have to pay 7 percent of their pre-tax income for their share of health insurance premiums. At $11,480 per year, the full cost of family coverage now exceeds the full-year income of a minimum wage worker. In 2006, premiums grew twice as fast as wages and inflation.
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The Henry J. Kaiser Family Foundation is a non-profit, private operating foundation focusing on the major health care issues facing the
Diane Rowland is executive vice president of the Henry J. Kaiser Family Foundation, (650) 854-9400; www.kff.org.
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