Rising health premiums

Attention again is focused today on rising health premiums. Some quotes from the article:

Health care costs continued to surge this year as family premiums in employer-sponsored plans jumped 11.2 percent, the fourth year of double-digit growth, according to a new study.

The cumulative effect of rising health care costs is taking a toll on workers: There are at least 5 million fewer jobs providing health insurance in 2004 than there were in 2001, according to the survey of 3,017 companies by the Kaiser Family Foundation and the Health Research and Educational Trust. . .

. . . the hike in health premiums outpaced both the 2.2 percent growth in wages and 2.3 percent growth in inflation by five times.

The solution that many are using to lower premiums, akin to car insurance, is to shift to a higher deductible insurance plan:

. . . the average deductible for a preferred provider organization rose 4.3 percent to $387 for a family of four. But in 2003 the deductible rose 9.5 percent, after a 43 percent surge in 2002.

However, employers are skeptical that the shift to a consumer-driven plan will solve the problem:

Overall employers are skeptical about whether tools such as disease management and consumer plans really lower costs. Only 42 percent of employers believed disease management and consumer driven plans were somewhat effective in lowering costs.

“Such efforts nibble at the edges,” said Altman. He said controlling health care costs was a vexing problem because no one wants to pay more, but people also aren’t willing to accept less service.

I agree with the last statement – shifting costs to the consumer only masks the underlying problem. Solutions to rising health care costs requires more radical change than shifting the burden of cost from employer to employee. Where to start? One would be to address the widespread practice of defensive medicine in the United States. Many physicians practice with the prevention of a lawsuit being a foremost priority – “do not get sued” comes right after “do no harm”. This results in excessive ordering of objective, expensive tests to cover yourself in court. It’s black and white: stories like this and this and this will happen if you don’t.

Until more radical change is instituted (i.e. tort reform as a means to rein in defensive medicine), we’re going to continue to play this shell game of rising health costs.

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