Sunday, November 17, 2002

Wallets take hit for health care

More for coverage, more to see a doctor, more for medicine

By Tim Bonfield
The Cincinnati Enquirer

The memos are going out to workers all over town: Health-care costs are soaring for a fourth straight year, employees will pay hundreds more for coverage next year, and bills could exceed $2,000 if a family member gets sick.

The worse news: Health-care costs are only sure to keep climbing.

As the annual rite of health plan re-enrollment unfolds across the Tristate, employers and employees are grappling with 15- to 30-percent hikes in health-care premium costs - and even larger increases in out-of-pocket fees.

Rising health costs
"Our co-pays (for doctor visits) went from $3.50 to $10. Our prescriptions went from between $2 and $4 to between $10 and $20," says Amy Maher, a senior account clerk for the Public Library of Cincinnati and Hamilton County. "As for me, my daughter uses an inhaler for asthma and the anti-depressant Celexa. Our bill went from $6 for both to $30 (a month). So obviously this new plan has been a punch to the wallet."

Workers everywhere are paying more of the health-care cost:

Co-payments for health services are rising. HMOs that used to charge $10 to see a doctor are charging $15, $20 and more. Employees who once paid little or nothing for a hospital admission are seeing co-payments as high as $250.

Even tougher for families, some employers are switching to plans that charge workers 20 percent, 30 percent, even 50 percent of medical expenses. That means employees can be exposed to bills of $2,000 to $5,000 or more before out-of-pocket spending caps kick in.

Prescription drug co-payments that were $5 to $8 a few years ago for any medication have evolved into three-tiered and four-tiered arrangements that charge from $10 for a generic pill to $45 or more for high-cost, brand-name drugs. Depending on the drug, people with chronic health conditions could see annual prescription expenses rise from $120 to $540 for a single medication.

"It's the largest increase we've ever seen," says Stacey Dickerson, operations manager for Verdin Co., the Cincinnati firm that made the World Peace Bell.

Verdin plans a series of brown-bag lunches this month to inform its 110 workers about a 30 percent price hike next year to keep their current health plan. The company currently pays 70 percent of overall premium costs, up from 58 percent four years ago. Workers pay the rest.

But there's a limit to how many increases the company can absorb.

"We can't keep doing this," Mr. Dickerson says. "Health benefits won't do anybody any good if the company goes out of business."

Workers' share rising

Most large employers - those with more than 500 workers - pay at least 80 percent of health benefit costs, according to the Towers Perrin consulting firm. Smaller employers often pay less. But whether the employer is large or small, more and more of health-care costs are being passed on to workers, analysts say.

For Mark and Ann Ausderbeck, three straight years of rising benefit costs from Mark's employer have created a thorny dilemma.

Of the Cheviot couple's three children, two have health problems. Jami, 9, has severe asthma and allergies. Eric, 2, was born with a rare heart defect that has required multiple open-heart surgeries, weeks of hospital care and numerous follow-up tests.

The family has been able to cover all of Eric's cardiac-related bills through a combination of private insurance and help from Ohio's Bureau for Children with Medical Handicaps.

But they don't get extra help for the allergy shots, inhalers and frequent doctor visits for Jami, which has forced Ann to go back to work on nights and weekends to make ends meet. Two of Jami's medications are among those with co-payments that jumped from $20 to $45 a month this year.

"I had to go back to work, but I can't work too much or we might not qualify financially "for state help, Ann Ausderbeck says.

Employers try to cope

OKI Systems, a company that distributes forklifts and other material handling systems, has hired a broker to shop around for a better deal after getting projections that benefit costs could jump 15 to 25 percent.

"We have a number of meetings (with potential insurers) set up for the next week or two," chief financial officer Gary Knapp says. "We're also still negotiating with our current insurer. So nothing is decided."

The frustration for the company has been that health benefit troubles seem to come up every year. The problem never stays fixed.

The company already has implemented several cost controls that other employers are considering this year.

OKI employees already have a three-tiered drug plan, and about 20 percent already have signed up for flexible spending accounts that use pretax dollars to offset many smaller medical bills.

But the company hasn't changed health plan carriers in about five years, and managers would prefer to avoid that.

Sharing the burden

Health care costs are rising for many reasons, experts say. Factors include rising costs of medications and new technology, the aging of America, rising labor costs for health care providers, unhealthful lifestyles, profit-seeking among insurers and providers, and seemingly limitless public expectations.

This year, more so than many past years, insurers and employers are passing on costs to employees in hopes of teaching a lesson about health care costs.

This is why many workers are hearing more about "consumer-directed" health plans, which expect people to become far more involved in making health insurance decisions than reading through the annual re-enrollment packet.

According to some, consumers who pay more for health care will finally be motivated to shop around, to question prices, to seek out quality-of-care information, to demand better service and skip unnecessary medical visits.

"We know what we pay for auto insurance. We know what we pay for our homes. But we don't know what we pay for health care," says Dr. Derek van Amerongen, vice president and chief medical officer for Humana/ChoiceCare. "Most people think that medicine is free and that health care is cheap."

Some say we have no one to blame for rising health care costs but ourselves.

"Maybe the title of your article should be `Are unhealthy lifestyles killing you?' " says Timothy Sawyers, a member of Performance Managed Care Consultants.

"Our sedentary lifestyles are making us morbidly obese as a nation. Obesity is leading to hypertension, diabetes, cardiovascular disease, chronic pain, depression and other mental health disorders."

Some changes still rare

While premium increases are common, only a few companies are changing what's covered by the health plan. And most of those are focusing on so-called "lifestyle medicine," says Linda Cushman Ruth, senior health care strategist for Hewitt Associates, a national health benefits consulting company.

Some plans that were pressured to cover Viagra, the popular sexual-performance enhancing drug for men, aren't covering it anymore. New limits also may be seen in coverage for infertility treatment, weight control and any other service that can be challenged as optional.

On this front, however, there has been more talk than action in part because opinions about medical necessity can vary so widely. Overall, about 17 percent of employers reduced benefits this year in addition to charging more for coverage, according to a study earlier this year by the Kaiser Family Foundation.

Among the few points of good news: The number of employers that completely discontinue offering health benefits remains small.

Instead, the amount of shopping around for health benefits deals has become intense.

ChamberHealth, a plan offered through the Greater Cincinnati Chamber of Commerce, offers a 3 percent discount to employers with two to 50 workers.

The price break may appear small, but the program has seen a 50 percent increase in enrollment compared with last year, says Greg Buscher, director of member benefits.

More employers also are offering pretax medical savings plans to allow employees to set aside their money for small health expenses, and more employees are starting to sign up, Ms. Ruth says.

"There's huge interest in health risk accounts now that the IRS has ruled that unused funds can be rolled over to the next year," she says.


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