Like the experimental frog
This excellent article is short on solutions yet offers a useful sketch of the consequences of "cost-shifting" for working people -- health care "creep" indeed. We hope everyone looks to Don McCanne's Quote of the Day for regular news and policy updates.
A quiet drain on workers' wallets
Creeping cost of health care siphons pay bit by bit.
Patrick Flanigan
Staff writer
Rochester Democrat and Chronicle (where web posts gravitate to a debate over single payer)
published November 4, 2007
Call it health-care creep.
Many American workers and their families see how their share of health-care costs continues to rise each year — but not at a pace so alarming that they point to it as a single cause of economic pain.
The headlines and the national debate over health care focus on the more than 40 million Americans with no health insurance. But, year after year, added to increasing costs for gasoline and food, health-care costs for consumers are an increasing part of the equation.
Like the experimental frog who doesn't respond to the rising temperature of the water around him, many workers with employer-subsidized insurance tacitly accept the incremental growth of their health-care expenses.
"It's one of those things that comes right out of your paycheck, so you don't pay a lot of attention to it throughout the year," said Brad Rye of Webster, who works for Eric Mowers and Associates advertising and public relations. "But we always look at it very closely (when it's time to re-enroll for health insurance). We want to know what our best options are."
According to a national human-resources company, employees' contribution to health insurance premiums have risen on average by $3.31 a week since 2001, when the average employee share was $659 a year.
That weekly increase works out to about the price of a small latte at Starbucks. But tell the same worker that his or her family's annual premium contribution jumped to $1,690 — more than $1,000 from where it was seven years ago — and it quickly starts to look like a hefty expense.
What's more, according to the study conducted by Hewitt Associates, employees' deductibles, co-payments, co-insurance payments and other out-of-pocket expenses are also rising.
Hewitt estimates that in 2008, the average employee will spend a total of $3,597 for health care — up from $1,320 in 2001.
That's an additional $2,277 a year, or $43.78 a week.
Spreading the burden
Employers have been asking their workers to take on a growing share of the company's health-care expenses for about 25 years, said Gerry Wedig, a health-care economist at the University of Rochester. "They're just trying to find ways to get these costs under control," Wedig said. "Employers are reluctant to actually reduce wages, so it's one way to keep compensation in line without raising a lot of objection from employees."
Health care is one of the fastest growing segments of the American economy, accounting for about $2 trillion in annual spending or 16 percent of the nation's gross domestic product. According to a report by the Kaiser Family Foundation, health-care spending will continue to rise and could account for almost 20 percent of the GDP by 2016.
"Health care spending has exceeded economic growth in every recent decade," the authors wrote. "The persistence of this trend suggests systematic differences between health care and other economic sectors."
Experts cite a number of reasons behind the meteoric growth. These include advances in technology that have turned once-terminal illnesses into chronic conditions treated with expensive medications or procedures; the aging U.S. population; and increases in such diseases as obesity-related diabetes.
Even healthy behavior can drive the cost of health care, said Dr. David Wandtke, the vice chairman of imaging science at Strong Memorial Hospital.
"People are living longer, healthier lives," he said. "They're going to require and demand more medical treatment."
Radiology exams like CT scans and MRIs are among the most expensive procedures in health care and insurance providers are asking doctors to be more judicious about ordering the tests. But Wandtke, who agrees the providers have a legitimate concern, said that's easier said than done.
He offered the example of a 60-year-old patient who injured her back while exercising. Years ago, her doctor might prescribe two weeks of rest and order an MRI if the pain hasn't gone away.
"Now she wants to get back on the treadmill as soon as possible," he said. "She doesn't want to spend two weeks on the couch."
Sandy Parker, president of the Rochester Business Alliance, said such trends leave employers little choice.
"If a company wants to reinvest in its own business, they're not going to be able to absorb these (health care) costs," she said. "It's just too much of a burden."
John Hayes, co-owner of GLC Business Services of Rochester, said his facilities-management company has contracted several different insurance providers in recent years to find the most cost-effective benefits package. Still, the company has cut its subsidy of single employees' health insurance to 70 percent from 75 percent.
"It's one cost we really don't have any control over," he said. "The benefit can't be bottomless. You want to be a good steward of labor, but you have to remain competitive."
Certainly, individual workers bear that burden differently.
Paul Failing of Irondequoit said he's noticed his health-care premium rise each year when it's time to re-enroll for his insurance policy. But the ESL Federal Credit Union employee said he hasn't paid much more attention to it than that.
"I recently traded in my Ford Expedition for a Honda CRV to adjust for higher fuel prices," he said. "I haven't had to do anything like that for health care. I'm blessed with good health."
Webster resident Robert Herloski, though, has found himself becoming an increasingly savvy consumer of health care because of a recent change in his insurance plan.
Herloski's employer, the Xerox Corp., offered a plan a few years ago that combines a high deductible with a pre-tax savings account — so he and his wife must pay all their health expenses until they reach that threshold.
He uses receipts from previous doctor's appointments to stock the account for the next year's health care expenses. But he's often stymied because the medical procedures are listed in a code and he can't easily figure out the actual cost.
"A lot of organizations are trying to control their costs and one of the ways they're doing that is to ask employees to be more cognizant of their expenses," Herloski said. "To be honest, I think it's good that more people are realizing what their medical costs really are."
Nancy Adams, executive director of the Monroe County Medical Society, said increased awareness of costs creates a double-edged sword.
"People should be more cost-conscious. One of the great disservices of the (health maintenance organization) system is it created the impression that health care costs $5 a visit," she said. But with the high deductible plans "unfortunately, some people are delaying care to lower their costs."
Adams cited a 2005 study by the Commonwealth Fund, a foundation working toward improved health care, that found about one-third of consumers in high-deductible plans said they delayed or avoided care. By comparison, 17 percent of consumers in comprehensive plans reported such delays.
"This has a lot of repercussions that concern us," she said.
For some workers, health-care benefits are as crucial as their pay.
Devery Reid-Holmes, a patient-care technician at Strong Memorial Hospital, doesn't pay any health-care premium under the contract she helped negotiate as an officer with the Service Employees International Union. So while her 3 percent raise adds just $16 week to her pay, she doesn't have to subtract any health-care expenses from that total.
"If I didn't have free health care, my paycheck would go to my car note, rent and health care," said Reid-Holmes, who is saving for a house. "We don't make a lot in wages, but at least we know we're guaranteed free health care for the next three years. That means a lot.
Controversial solutions
The rising cost of health care, with its subsidiary trends of high prescription-drug costs for the elderly, global competition with countries that provide socialized medicine, and a growing number of Americans living without health insurance, is driving a policy debate that's now decades old.
Leading presidential candidates have proposed health-care reform packages. And a bill to expand the number of children covered by the government-run health-care plan was recently vetoed by President Bush.
Wedig predicted health care will ultimately be rationed, with someone given the authority to determine when particular treatments are worth their cost to keep individual patients alive or well. Regardless of who's paying for it or how much it costs, consumers will always demand a product that keeps them alive.
"Everybody wants more time with their family members," he said.
A quiet drain on workers' wallets
Creeping cost of health care siphons pay bit by bit.
Patrick Flanigan
Staff writer
Rochester Democrat and Chronicle (where web posts gravitate to a debate over single payer)
published November 4, 2007
Call it health-care creep.
Many American workers and their families see how their share of health-care costs continues to rise each year — but not at a pace so alarming that they point to it as a single cause of economic pain.
The headlines and the national debate over health care focus on the more than 40 million Americans with no health insurance. But, year after year, added to increasing costs for gasoline and food, health-care costs for consumers are an increasing part of the equation.
Like the experimental frog who doesn't respond to the rising temperature of the water around him, many workers with employer-subsidized insurance tacitly accept the incremental growth of their health-care expenses.
"It's one of those things that comes right out of your paycheck, so you don't pay a lot of attention to it throughout the year," said Brad Rye of Webster, who works for Eric Mowers and Associates advertising and public relations. "But we always look at it very closely (when it's time to re-enroll for health insurance). We want to know what our best options are."
According to a national human-resources company, employees' contribution to health insurance premiums have risen on average by $3.31 a week since 2001, when the average employee share was $659 a year.
That weekly increase works out to about the price of a small latte at Starbucks. But tell the same worker that his or her family's annual premium contribution jumped to $1,690 — more than $1,000 from where it was seven years ago — and it quickly starts to look like a hefty expense.
What's more, according to the study conducted by Hewitt Associates, employees' deductibles, co-payments, co-insurance payments and other out-of-pocket expenses are also rising.
Hewitt estimates that in 2008, the average employee will spend a total of $3,597 for health care — up from $1,320 in 2001.
That's an additional $2,277 a year, or $43.78 a week.
Spreading the burden
Employers have been asking their workers to take on a growing share of the company's health-care expenses for about 25 years, said Gerry Wedig, a health-care economist at the University of Rochester. "They're just trying to find ways to get these costs under control," Wedig said. "Employers are reluctant to actually reduce wages, so it's one way to keep compensation in line without raising a lot of objection from employees."
Health care is one of the fastest growing segments of the American economy, accounting for about $2 trillion in annual spending or 16 percent of the nation's gross domestic product. According to a report by the Kaiser Family Foundation, health-care spending will continue to rise and could account for almost 20 percent of the GDP by 2016.
"Health care spending has exceeded economic growth in every recent decade," the authors wrote. "The persistence of this trend suggests systematic differences between health care and other economic sectors."
Experts cite a number of reasons behind the meteoric growth. These include advances in technology that have turned once-terminal illnesses into chronic conditions treated with expensive medications or procedures; the aging U.S. population; and increases in such diseases as obesity-related diabetes.
Even healthy behavior can drive the cost of health care, said Dr. David Wandtke, the vice chairman of imaging science at Strong Memorial Hospital.
"People are living longer, healthier lives," he said. "They're going to require and demand more medical treatment."
Radiology exams like CT scans and MRIs are among the most expensive procedures in health care and insurance providers are asking doctors to be more judicious about ordering the tests. But Wandtke, who agrees the providers have a legitimate concern, said that's easier said than done.
He offered the example of a 60-year-old patient who injured her back while exercising. Years ago, her doctor might prescribe two weeks of rest and order an MRI if the pain hasn't gone away.
"Now she wants to get back on the treadmill as soon as possible," he said. "She doesn't want to spend two weeks on the couch."
Sandy Parker, president of the Rochester Business Alliance, said such trends leave employers little choice.
"If a company wants to reinvest in its own business, they're not going to be able to absorb these (health care) costs," she said. "It's just too much of a burden."
John Hayes, co-owner of GLC Business Services of Rochester, said his facilities-management company has contracted several different insurance providers in recent years to find the most cost-effective benefits package. Still, the company has cut its subsidy of single employees' health insurance to 70 percent from 75 percent.
"It's one cost we really don't have any control over," he said. "The benefit can't be bottomless. You want to be a good steward of labor, but you have to remain competitive."
Certainly, individual workers bear that burden differently.
Paul Failing of Irondequoit said he's noticed his health-care premium rise each year when it's time to re-enroll for his insurance policy. But the ESL Federal Credit Union employee said he hasn't paid much more attention to it than that.
"I recently traded in my Ford Expedition for a Honda CRV to adjust for higher fuel prices," he said. "I haven't had to do anything like that for health care. I'm blessed with good health."
Webster resident Robert Herloski, though, has found himself becoming an increasingly savvy consumer of health care because of a recent change in his insurance plan.
Herloski's employer, the Xerox Corp., offered a plan a few years ago that combines a high deductible with a pre-tax savings account — so he and his wife must pay all their health expenses until they reach that threshold.
He uses receipts from previous doctor's appointments to stock the account for the next year's health care expenses. But he's often stymied because the medical procedures are listed in a code and he can't easily figure out the actual cost.
"A lot of organizations are trying to control their costs and one of the ways they're doing that is to ask employees to be more cognizant of their expenses," Herloski said. "To be honest, I think it's good that more people are realizing what their medical costs really are."
Nancy Adams, executive director of the Monroe County Medical Society, said increased awareness of costs creates a double-edged sword.
"People should be more cost-conscious. One of the great disservices of the (health maintenance organization) system is it created the impression that health care costs $5 a visit," she said. But with the high deductible plans "unfortunately, some people are delaying care to lower their costs."
Adams cited a 2005 study by the Commonwealth Fund, a foundation working toward improved health care, that found about one-third of consumers in high-deductible plans said they delayed or avoided care. By comparison, 17 percent of consumers in comprehensive plans reported such delays.
"This has a lot of repercussions that concern us," she said.
For some workers, health-care benefits are as crucial as their pay.
Devery Reid-Holmes, a patient-care technician at Strong Memorial Hospital, doesn't pay any health-care premium under the contract she helped negotiate as an officer with the Service Employees International Union. So while her 3 percent raise adds just $16 week to her pay, she doesn't have to subtract any health-care expenses from that total.
"If I didn't have free health care, my paycheck would go to my car note, rent and health care," said Reid-Holmes, who is saving for a house. "We don't make a lot in wages, but at least we know we're guaranteed free health care for the next three years. That means a lot.
Controversial solutions
The rising cost of health care, with its subsidiary trends of high prescription-drug costs for the elderly, global competition with countries that provide socialized medicine, and a growing number of Americans living without health insurance, is driving a policy debate that's now decades old.
Leading presidential candidates have proposed health-care reform packages. And a bill to expand the number of children covered by the government-run health-care plan was recently vetoed by President Bush.
Wedig predicted health care will ultimately be rationed, with someone given the authority to determine when particular treatments are worth their cost to keep individual patients alive or well. Regardless of who's paying for it or how much it costs, consumers will always demand a product that keeps them alive.
"Everybody wants more time with their family members," he said.
posted by Andy at Tuesday, November 13, 2007
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