America's Health Care Conundrum

March 27, 2007

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We've all heard about the "health care crisis," so it should come as little surprise that there are more than 48 million Americans without health insurance and approximately 32 million others who are under-insured. Here we offer benefits spending trends for employers and insurance tips for employees.

The United States is the only industrialized nation that does not have universal health coverage. This, in addition to other facts, has made the rising cost of U.S. health care the most pressing concern for 85 percent of U.S. adults, more so than the war in Iraq, rising fuel costs and the threat of global warming, according to a recent survey sponsored by the American Society for Quality (ASQ) and conducted by Harris Interactive.

The number of uninsured rose by 6 million people over the past four years, according to AmericanHealthCareReform.org, while more Americans each year are forced to file for bankruptcy due to medical bills. In fact, people file for bankruptcy at a rate of one every 30 seconds (1,051,200 annually) because of medical bills. According to the ASQ survey, more than one in four U.S. adults have not filled a prescription or have delayed a medical procedure due to expense.

Basically, Americans now have a two-caste system: people who, by nature of the type of work they do and where they are in an organization, have health insurance; and those in the other group who are deemed not important enough to have insurers support their health. Actually, it isn't that simple, either. Even among those who do have health insurance, there is a wide variation in how much they must contribute to health insurance costs. Furthermore, Medicaid and Medicare pay for people over 65 and for the very low-income people.

Economist Jonathan Skinner says the powerful health care lobbies and Americans' suspicion of what many see as socialized medicine make a radical overhaul of the system difficult, Voice of America reports. Yet Skinner says "the increasing financial strain of health care spending on American businesses, government and families will make some change inevitable," as VOA reports.

By "strain," you can bet that it's a strain on competitiveness, too. When an automaker spends more for an employee's health care than for steel in a vehicle, a huge problem can't be denied.

Oddly enough, it is IBM that sums up the health care dilemma rather succinctly:

For employers, the health care crisis presents a range of business problems: it not only affects the bottom line, but as part of a benefits package, it is key to helping companies attract and keep the best people. Just as they work to plan and shape the future of their own industries, businesses need to take an active role in creating a new health care system — one that is value-based, affordable and sustainable.

Trends For Employers From 1960 to 2002, employer spending on health benefits increased threefold, according to the Employee Benefit Research Institute in January 2005. Last year, overall health care costs grew by 8 percent, a level at which costs are expected to remain in 2007 and 2008, representing sharp declines since 2002 when costs grew by 14.7 percent, according to a Watson Wyatt/National Business Group on Health annual survey published this month (via Workforce Management). (According to Cowden Associates, Inc., the national average increase in the cost of health care premiums for employers was 7.4 percent in 2006. This figure remains unchanged from 2005.)

As for the future, we look to PricewaterhouseCoopers' recent "Behind the Numbers: 2007 Medical cost trends for employers" report:

Health care spending in the U.S. is expected to increase by double digits in 2007. The medical cost trend projections are used by insurance carriers and employers to set health insurance premiums levels and design benefit packages offered in 2008. Early estimates reflect widespread optimism that health spending can be curbed if consumers share more of the costs.

When health care costs began to show a significant year-over-year rise, employers started offering HMO plans. This allowed insurers to bargain with health care providers, shunting those with insurance but unable to afford the extra cost of the privilege of choosing the physicians and specialists they preferred to seek services from those selected by the insurer. Unfortunately, this wasn't enough to keep medical costs from skyrocketing.

More recently, many employers offer higher-cost insurance with higher deductibles as well as fewer health care benefits. Some employers do what they can to minimize costs for employees but feel forced to pass along some increases or live dangerously in terms of investing in essential research and development (R&D) for new services and products.

(For information about the role prescription drugs play in American health care, see "Do Drugs Make Us Feel Better or Worse?")

Tips For Employees "Until recent years, the overwhelming majority of Americans received health insurance through their jobs," law firm Young Ricchiuti Caldwell & Heller, LLC notes. Although those numbers "have declined somewhat in recent years," employer-sponsored health insurance "remains the most common source of health insurance."

The law firm has come up with some tips for preventing medical disputes. Foremost:

The most important point, by far, is communication with doctors, nurses, and therapists. Talk to them. Know what they are doing for you or your loved one, and know what they think will help. Find out what they think, what the prospects are, what the treatment options are, and what treatment settings are appropriate and will be appropriate in the future. If you don't think you know what is going on, ask the health care providers for some time. If you are in a hospital or other institutional setting, a social worker will often set up a meeting to discuss treatments and treatment options.

Further, there are some other straightforward things that you can and should do if there is any prospect at all that a dispute might arise with the health insurer:

1. Obtain a copy of the insurance contract that establishes and governs the available benefits (sometimes referred to as a "plan document"). The law requires health insurance companies to provide these documents. 2. Know and understand the nature of the injuries, the treatment being recommended and its alternatives, and the reasons for the recommended treatment. 3. Be persistent. When dealing with a claims person or adjuster, do not be afraid to ask to speak to a supervisor. 4. Keep records of your managed care contacts. 5. If a managed care representative tells you that he or she will get back to you, ask for an expected timeframe. Also, ask for a way you can get back in touch with the representative. 6. Whenever you write to an insurer, keep a copy of what you send and make a note of when and how you sent it. 7. Be aware of the health care coverage provider's claims and appeals procedures. Ask about these deadlines, and ask the insurer to send you information in writing that tells you what the appeal procedures are and how you can follow them.

"The complicated administrative processes established by many managed care providers can be daunting for even the most motivated and focused family members," notes Young Ricchiuti Caldwell & Heller, LLC.

Of course, understanding them is becoming increasingly necessary. According to AARP, about 18,000 people a year die prematurely because they lack insurance.

We are each a patient or potential patient.

To see how your employer compares with others, visit the Employee Benefit Research Institute.

Resources

Adults More Concerned About Rising Cost of U.S. Healthcare Than Iraq War American Society for Quality (via CNW Telbec) , March 22, 2007

Even Republicans Hate Our Health Care System by David Moberg In These Times (via AlterNet), March 12, 2007

There are over 48 Million Americans with No health insurance American Health Care Reform

U.S. Health Care: World's Most Expensive by Zlatica Hoke Voice of America, Feb. 28, 2006

Everyone's business: Fixing healthcare IBM e-magazine, Jan. 1, 2007

Study: Firms Want Workers to Be Health Care Consumers Workforce Management, March 16, 2007

2006/2007 Tri-State Area Employee Benefit Survey Cowden Associates, Inc.

Behind the Numbers: 2007 Medical cost trends for employers PricewaterhouseCoopers

Guide to Rights: Health Insurance Young Ricchiuti Caldwell & Heller, LLC

Healing Our System by Patricia Barry and Barbara Basler AARP Bulletin, March 2007

Typical Health Benefit Package in Private Industry Employee Benefits Research Institute, April 2006

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