Feeling the health insurance squeeze

Tags: siy, health insurance, health care costs, perspective

By Linda Siy, M.D.
TAFP President, 2007-2008

We are inundated almost daily with tales of escalating health care costs, exploding health insurance premiums and horror stories from small businesses that have been forced to drop health insurance and families who have lost coverage.

Health care costs have long outpaced the rest of the economy. In 2008, health insurance premiums are projected to increase at more than twice the rate of inflation. Yet most employers simply accept this as a cost of doing business. But what are we getting in return for these exorbitant health insurance premiums?

Recently, my 11-employee professional organization was notified that it would be hit with a 23.5-percent premium increase to retain health insurance coverage. We are not about to throw our employees overboard to swim in the state’s ocean of working uninsured.

When we investigated what would justify such a steep increase, we were shocked to learn that only 74 percent of our premiums had been spent on medical care. The remaining 26 percent went to the insurance company’s administrative costs and profit. Insurance companies call this the medical-loss ratio, the percentage of premiums collected compared with what they spend on health care services.

In a time of record health insurance profits and obscene executive compensation, how are these health insurance costs justified? I am reminded of a quote from Susanne Madden, a former executive with United Healthcare and now president and CEO of The Verden Group, which assists health care providers in navigating the managed care industry: Rather than controlling costs, and making health care affordable for all, managed care companies are setting the price and increasing it every year.

The simple fact is health insurance plans hit small employers with double-digit premium hikes because they can. The consolidation of the health insurance market has limited competition and access to affordable insurance options. Texas’ oversight of the health insurance industry is at best tepid, and most carriers claim they are federally exempt from state regulations. The companies’ methods of calculating premiums are esoteric, actuarial voodoo—anything but transparent.

Since family physicians serve on the front lines of virtually every health care delivery system, we are painfully aware of what happens to working people who don’t have insurance when they get sick. They are more likely to wait to see a doctor until their illness has progressed and is harder and more expensive to treat. They are just as likely to make their first trip to the emergency room instead of their family doctor. They are more likely to file for bankruptcy, more likely to stay sick longer and thus less likely to be productive workers.

This year’s election cycle will hopefully bring into focus what needs to be fixed. Here are some reforms that the family physicians in Texas and across the country are calling for:

  • Transparency: Doctors and hospitals have no problem competing over how to provide the right care at the right place and time; let’s also have truth in premiums—how health insurance premiums are priced and where those premiums are spent.
  • De-fragment care: Patients should have a “medical home” where their primary care physician coordinates their care to reduce redundant or unnecessarily expensive services.

It is time to shine a light on everyone in the health care system. Hold us all accountable to evidence-based standards. Let us all compete over the value and quality of health care we provide instead of perpetuating this unsustainable race to the bottom. We must stop this downward spiral, because we can.

Editor’s note: This perspective was originally published as an opinion-editorial article in the Austin American-Statesman Thursday, Jan. 31, 2008, among other state newspapers.

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