Little on Horizon To Counter Rising Health Costs, Industry Experts Say
Although health care inflation is rising and employee health insurance premiums are "skyrocketing," there appears to be "nothing on the horizon that promises to get costs back under control," such as the idea of managed care in the early 1990s, the Sacramento Bee reports. During that time, "rampant inflation" threatened the health care industry, and managed care "promised to rein in" rising costs. But consumers "revolted" against HMOs' promise to contain costs and sought less restrictive health plans, leading this year to the "highest spike" in the cost of California employee health benefits since 1991, the Bee reports. According to a study released last week by the Kaiser Family Foundation and the Health Research and Education Trust, the rate of Californians enrolled in HMOs fell from 55% in 2000 to 48% in 2001; at the same time, California employers' health premiums rose 9.9% last year, more than twice the 4.3% inflation rate in California. Employers expect health care costs to rise 12.7% this year, after an increase of 11.2% in 2001. Blaine Bos, a consultant with William M. Mercer, said, "We can't expect the double-digit trend to abate over the next few years -- not with all those aging baby boomers still working. Unless a new silver bullet materializes -- like managed care in the '90s -- this rising tide may become a full-fledged flood."
There are, however, a few strategies that could "extend the viability" of managed care for individuals willing to pay more for increased choices, the Bee reports. The strategies include tiered prescription benefits, which charge less for generic and mail-order drugs; tiered hospital or doctor networks, which offer lower fees to beneficiaries who choose doctors or hospitals within a specific network; or "defined contribution" plans, under which employers set a specific amount for employees to "purchase the plan of their choice." Although the strategies allow employers to maintain health benefits and control costs, they are not without a "downside," the Bee reports. Some experts say the tiered and defined contribution plans may "stratify the population" and "undermin[e] the pooling of risk that makes insurance work." Paul Ginsburg, president of the Center for Studying Health System Change, said, "These large copayments and tiered networks are helping people stay in health insurance by keeping premiums down. But it is going to curb access to care because the choices can't all be free." Such proposals also could "undermin[e] overall quality of health insurance," Bruce Bodaken, chair, president and CEO of Blue Shield of California added. Bodaken said, "I think for a set of consumers, defined contribution and tiers will make sense, but we worry a great deal about these products that cater to the well and wealthy. For social insurance to work, you have to have a balance between covering the sick and the well, and these products dilute this model unless you have some sort of safety net" (Rapaport, Sacramento Bee, 2/24).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.