Health care costs for businesses will continue to skyrocket
By Julie Sneider, for SBT
The outlook for the health care industry in 2004 is similar to this year’s story: No end in sight to double-digit increases in the costs of employee health insurance for businesses.
And as employers continue to shift those cost increases onto employees, health care services – from hospital stays and doctor’s visits to prescription drugs – will cost more for consumers.
Public frustration at the health care system will continue to grow, prompting politicians of both parties to hatch makeshift solutions in an effort to appease voters in a presidential election year.
In short, little will change.
National predictions are that the trend of double-digit increases in health insurance costs will continue for another five years, said Jim Mueller of Frank Haack & Associates, an insurance benefits firm in Wauwatosa.
The story for southeastern Wisconsin will be similar to the national trend, with costs increasing at the double-digit level.
"Still, the No. 1 concern next year will be cost," Mueller said. "Nothing else will be talked about more than affordability of health insurance."
If there’s any consolation in that prediction, it could be that insurance rate increases nationally may start to moderate in 2004. Hewitt Associates, a global human resources company based in Lincolnshire, Ill., reported June 23 that initial health maintenance organization (HMO) rate increases for 2004 are averaging about 18%, compared with 21% at this same time a year ago.
After plan changes and terminations, the average HMO premium increase nationally ended up being about 17% in 2003, Hewitt reported.
"The good news is that this may signal the moderation of health care increases over the next few years," said Ken Sperling, east market leader for Hewitt’s health management practice.
Hewitt officials predict employers will pass a greater share of health care costs onto employees through higher co-payments for brand name prescription drugs, specialty care office visits and health care provider services not in a preferred provider network.
Mueller expects small employers will pay a higher rate of increase than larger companies, but HMOs and other insurers will likely roll out new products and options targeting the small group market. The entry of Thousand Oaks, Calif.-based Wellpoint Health Networks into the Milwaukee area through its $906 million acquisition of Milwaukee-based Cobalt Corp. should be positive for the insurance market here, Mueller said.
The acquisition is expected to close by the end of 2003.
On average, health care will cost more in southeastern Wisconsin next year than in other parts of the country, a trend established in recent years.
Local hospital profits will likely decline in 2004, particularly as low Medicare reimbursement forces hospitals to shift costs, and new for-profit heart hospitals compete for marketshare.
HMO profits, meanwhile, will remain steady.
If anything good comes out of the cost-shifting trend, it will be consumers becoming more assertive when shopping for health care services, Mueller said. Local managed-care plans will offer more multi-tier provider networks, where consumers pay more or less out of pocket, depending on the level or "tier" of health care providers they choose. That will force consumers to ask more questions about cost and quality.
July 11, 2003 Small Business Times, Milwaukee
