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Co-pays a thing of the past in some markets

Businesses — and individuals — find insurance too costly

Few issues have caused more concern for businesses in recent years than the rapidly increasing cost of employee health insurance premiums. With premiums for small businesses seeing double digit increase for the past several years, pressure is increasing to do something to keep health insurance available and affordable.

“We do hear at lot of complaints from people indicating that they simply cannot afford their health insurance programs,” said Cathy Vernon, director of consumer services, Mississippi Department of Insurance. “I know some people are going to really high deductibles. We have been faced with the same problem even with the State of Mississippi’s self-funded plan for state employees. In the past few years we have reduced benefits trying to control the premium increase.”

Taking a high deductible can be a good option for people, but for others who find it difficult to pay routine health expenses, that option isn’t attractive.

“The same thing isn’t right for everyone,” Vernon said. “Some people can afford to assume some of the risk themselves. And then there are those who cannot.”

Increasing costs of health insurance are directly related to the rising cost of medical care. Not only are costs of regular medical services increasing, but there is a lot of new technology that wasn’t even available five or 10 years ago.

“And everybody wants the best medical care when they are sick,” Vernon said.

Malpractice lawsuit awards and an aging U.S. population are also factors behind health care costs increasing faster than the rate of inflation. Another issue is that people who are the most healthy are more likely to forego insurance than people with health problems, which puts more people in the insurance pool who use the benefits frequently.

Samuel S. Patterson, president, United Healthcare of Mississippi, said there is significant concern from employers about the increasing costs of health care insurance coverage.

“Employers like to have health care benefits because it helps attract and retain high quality employees,” Patterson said. “It goes hand-and-hand with good pay. The responsibility is to provide a product employers can purchase that is of strong quality and cost effective. From the employer’s perspective, if the prices go too high employers are basically forced to get out of providing this employee benefit market. If they can’t afford to provide the product to employees, that is bad, obviously, because it puts their employees into the uninsured pool.”

In states where United Healthcare does business, nine out of the 10 people who are uninsured come from working households. Either the employee doesn’t participate because the plan is too expensive, or the employer doesn’t offer the benefit.

An estimated 40 million Americans do not have health insurance. What should be done to address the problem of the uninsured and the potentially millions more than will be uninsured if health care insurance becomes even less affordable?

Patterson said one option is a return to the catastrophic type benefit structures that used to be around in the 1950s and 1960s. Instead of low co-pays, there is an upfront deductible before the insurance company pays anything.

“The whole concept of co-pays is becoming a thing of the past in some markets,” Patterson said. “That is one way the market is trying to accommodate the issue of these skyrocketing premiums. What has happened with the use of co-pays is the individual loses track on how expensive this stuff is. If you are paying $500 for a service, that is a whole different situation than if you are paying a $5 or $10 or $50 co-pay. And co-pays don’t keep pace with the rising cost of health care.”

When people only have to pay a small percentage of the cost, they tend to pick the most expensive service. When they have to pay out of their own pocket, they tend to economize.

“This all comes back to the issue of having a financial stake in the health care decision,” Patterson said.

Another trend to address escalating premium costs is higher cost sharing to the employees; employees are picking up a larger percentage of the premium. And to make premiums more affordable, many businesses are offering employees the option of using a medical savings account, which use pre-tax earnings to pay premiums and health care costs. The savings average 20% to 30%.

Minimizing administrative expenses is another way to contain costs for health care and insurance.

“Blue Cross & Blue Shield (BCBS) of Mississippi is working to lessen the impact of rising health care costs on multiple fronts,” said Donald Bonin, company spokesperson. “First, we’re working internally to ensure effective and efficient processes. We have implemented several e-business initiatives to improve workflows and efficiencies among our employees, our customers and our provider partners. These e-business initiatives help us provide better service to our customers and help us minimize our administrative expenses.”

Working with health care providers to help contain costs is another important factor. BCBS, the largest health insurer in the state, has an extensive network of health care providers and pharmacies.

“These networks help the customer’s health care dollar go farther,” Bonin said. “And while we continue to work with the provider community, we’re examining areas where we feel like we can have the most impact. For instance, to address the cost of prescription drugs, we’ve implemented a three-tiered drug plan that encourages use of generic drugs. The plan still allows choice, but it helps consumers make informed decisions about prescription drugs.”

Helping consumers make informed choices is a key component that BCBS feels the industry has overlooked over the years. The better informed people are about their health and the cost of their health care options, the better decisions they can make. Bonin said the company is trying to help educate consumers not only about making informed choices about their health care, but is also encouraging them to take a look at their lifestyles and make healthier decisions.

“After all, the most cost-effective way to treat illness is to stay healthy,” Bonin said. “While that is an obvious concept, Mississippi’s high rate of obesity, diabetes and heart disease indicate we all need more health and wellness information and opportunities.

“To encourage better health, we launched a program this year that offers membership discounts at participating hospital-based wellness centers across the state. Anyone with a Blue Cross & Blue Shield of Mississippi ID card can join one of these participating facilities at a discount. We currently have 17 participating centers.”

BCBS also recently launched a diabetes management program in the Hattiesburg area. The program is designed to encourage diabetic patients to see their doctors regularly and attend free diabetes education classes. In addition, the program helps doctors treat the disease more effectively using a web-based registry and emphasizing treatment guidelines. The program is in the early stages now, and BCBS plans to expand it to the rest of the state.

There is no single answer for managing the rising costs of health care.

“And no one entity can do it alone,” Bonin said. “We all need to work together — insurers, health care providers and consumers — to have an impact on rising costs. But by taking responsibility for our health and making informed choices, we can make a difference.”

Contact MBJ contributing writer Becky Gillette at mullein@datasync.com or (228) 872-3457.


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