HMOs: Workers, Retirees Face Premium Hike
Recent studies have shown that workers and retirees relying on employer-sponsored health insurance may soon be faced with "significant premium increases," and some small businesses may stop offering coverage altogether, the Washington Post reports. A recent Kaiser Family Foundation report, published in the Sept./Oct. edition of Health Affairs, revealed that ballooning costs for prescription drugs have driven premiums up by 8.3% this year, with more price hikes slated for the coming year. The report, based on a survey of more than 3,000 employers nationwide, predicted that "employers may respond to the rising cost of health insurance (by passing) some portion of the increased cost on to employees." From the spring of 1999 to the spring of 2000, insurance costs rose to $2,426 per employee and $6,351 per family, the report found. In addition to higher prescription drug costs, businesses also say that increased hospital and physician spending, higher insurance company profits and better medical technology contribute to the increase. HMOs have managed to quell some costs by limiting patient access to expensive medical specialists and by reducing payments to hospitals, doctors and other care providers, but the "rapid escalation" of prescription drug prices has caused providers to raise costs for employers who offer health coverage. Meanwhile, "political pressures and public opposition" to HMOs have "prompted the industry to loosen up in ways that cost more," such as allowing customers more flexibility in their choice of physician. Analysts predicted that "it's only a matter of time until costs trickle down" to workers in the form of higher deductibles, more cost-sharing and increased copayments (Duggan/Levine, Washington Post, 9/26).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.