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Health benefit costs may force tough choices.

WASHINGTON -- The cost of health insurance continues to rise, but workers are resisting the idea of joining tighter provider networks to save money, according to a recent study released by the Henry J. Kaiser Family Foundation and the Health Research and Educational Trust.

The survey of more than 1,800 employers found that only about one-quarter of employees belonged to an HMO in 2003, while 54% were enrolled in a PPO, and 17% were enrolled in a point-of-service plan. The percentage of employees belonging to HMOs was down 3% from the previous year.

In addition, the percentage of workers who had an HMO plan among their benefit choices dropped in 2003--from 50% to 47%.

At the same time, the percentage of workers who could choose to get their health care through PPOs rose from 74% to 77%.

"There is a high level of interest [among employers] in tighter managed care networks.

"But some employers didn't think that there would be much interest among employees," Gary Claxton, vice president of the Kaiser Family Foundation, said at a briefing sponsored by the foundation.

Panel members expressed concern about the continuing rate of increase in health insurance costs. "There's been no letup in the rate of increase in health insurance premiums," said foundation president Drew Altman. "It was up 13.9% this year, up even a little faster than last year." The average annual cost of a family health insurance policy is now $9,068, he noted.

The increase in PPO membership may have contributed to this year's cost increases, said Jon Gabel, vice president for health system studies at the Health Research and Educational Trust, a division of the American Hospital Association.

"As we moved from 'managed care heavy' to 'managed care lite,' insurers lost a lot of negotiating power," he said. The only way to slow down the increases is for employers and employees to take a "bitter remedy" of higher deductibles and narrower provider networks.

Employers used a variety of techniques to deal with the rising costs, including shifting some more costs to employees and "eating" some of the cost increases.

The out-of-pocket health care costs for employees have experienced particularly sharp increases since 2000.

PPO deductibles for workers using non-preferred providers have increased 65%, copayments for drugs that are not on a preferred drug lists have jumped 71%, and worker contributions for family coverage are up 49%.

On the other hand, Mr. Altman said he was pleasantly surprised to find that employers did not drop coverage. "That speaks to the value of health insurance today."

This year's increase in average health premium costs was five times the rate of inflation, noted Gerry Shea, assistant to the president of government affairs at the AFL-CIO.

"The report is a perfect snapshot of our national schizophrenia about health care. On one hand, there is a pretty broad consensus among employers and within trade unions that this is an untenable situation .... It's just going to break the bank some-place, somehow.

"But there's also a very strong link in workers' minds and employers' minds between employment and health care. The problem is, we have this health coverage at an enormous economic price."

Employers "need to do better about what we are buying," said Kate Sullivan, director of health care policy at the U.S. Chamber of Commerce.

Employers are looking primarily at costs, "and they just trust that the plan is high quality.

"But the plan is only as good as the providers that are in it .... Initiatives to reduce medical errors and improve quality--these things need to be pursued."


Associate Editor, Practice Trends
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Title Annotation:Practice Trends
Author:Frieden, Joyce
Publication:Clinical Psychiatry News
Date:Feb 1, 2004
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