Health care cost soar, coverage erodes: Troubling prognosis for state at annual health car forum
By Michelle Hillman
Wednesday, October 23, 2002
WALTHAM - Increases in health-care spending are in the double digits, insurance premiums are rising faster than the rate of inflation and there's no solution on the horizon.
That sentiment was echoed by several health-care policy experts who spoke at the Massachusetts Medical Society here yesterday as part of the "State of the State's Health Care" annual forum.
Drew E. Altman, president and CEO of the Kaiser Family Foundation in California, told 125 physicians and policymakers that health-care costs will continue to rise sharply while coverage erodes.
Total premiums this year rose 12.7 percent nationally. The average individual premium increased from $2,650 last year to $3,060 this year, and an average family premium increased by $901 this year to $7,954.
There are currently 41 million Americans without insurance coverage, a problem expected to get worse as many states, including Massachusetts, reduce Medicaid programs for the poor and disabled.
In Massachusetts, 50,000 residents stand to lose coverage under its version of the federal Medicaid program - MassHealth Basic - effective April 1, 2003.
Nancy Turnbull, director of educational programs at the Harvard School of Public Health, said pressure will continue to be put on MassHealth as the financial picture to erodes.
She said cutting eligibility will cause the ranks of the uninsured to rise, which will have a "tremendous" effect on hospitals and health-care providers left to care for the poor and disabled.
The cost of insurance is rising at a faster percentage rate than earnings for the first time in a decade, Altman said. He said rising insurance costs are creating problems for employers, but even bigger problems for employees who are being asked to pay more for fewer benefits.
In a national survey of firms with 200 or more workers this year, Altman said 78 percent said they would increase the amount employees pay for health insurance.
Health-care spending per capita was up 10 percent in 2001, which is the first double-digit increase since 1990, said Paul B. Ginsburg, president of the Center for Studying Health System Change in Washington, D.C.
Ginsburg said the elderly aren't to blame for rising health-care costs. Increased hospital spending on wages and new technology is the culprit. He said in 2000, the average hourly wage for health-care workers increased by 3 percent, followed by a 6 percent hike last year.
Hospitals are spending more on wages because they are better paid by health plans. In the 1990s, many hospitals merged or consolidated giving them more leverage to negotiate higher prices for services with health plans.
Ginsburg said long-term drivers of health-care costs are physicians and patients' penchant for the best technology medicine has to offer.
While technology can help reduce costs with faster and better ways to treat people, it also creates more volume because more people want the latest in treatments.
The "big ticket" problems in health-care spending are figuring out how to cover the uninsured and creating a prescription drug benefit for seniors. He said it was a "national shame" that seniors don't have drug coverage, and people without insurance coverage are left to fend for themselves.
Altman said to cover 41 million uninsured people costs from $85 billion to $125 billion a year, and to provide a comprehensive drug plan for seniors would cost $350 billion to $800 billion over 10 years.
The problems will be addressed only when there is enough concern in the public, said health policy experts at yesterday's event. When enough people become uninsured, or the cost of insurance increases beyond what people can afford, is when change will occur, Ginsburg said.