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Health Insurance to Rise Again Close to 10%

The cost of health insurance in Massachusetts is expected rise at almost twice the inflation rate once again this year.

The state's major health plans predict premium hikes in the neighborhood of 10 percent.

The increases vary but many employers say they'll still be difficult to absorb. WBUR's Martha Bebinger reports.

BEBINGER: The state's largest insurer, Blue Cross Blue Shield says premiums for most of its customers will rise 8 to 11%, a few points more for small businesses. Senior Vice President for Sales Tim O'Brien says those increases are slightly lower than the projections at this time last year

TIM O'BRIEN: We're seeing a 1-2% reduction in the rate of increase and I think any employer that you talk to would view that as good news but none-the-less we need to focus on all the programs we're doing to improve the affordability of health care.

BEBINGER: O'Brien says employers who are trimming that 1-2% from the price of health insurance are doing that by asking employees to pay higher deductibles or co-payments, and by adopting programs that help workers improve their health. Jim Klocke, Senior Vice President at the Greater Boston Chamber of Commerce, says few employers will take next year's rates as good news.

JIM KLOCKE: Anytime you get a double digit increase in a major business cost, it give you headaches, it causes you problems. It's a problem not just that costs are high, but that they keep growing at a high rate.

JON HURST: It's very discouraging; the promise of health care reform clearly has not been felt by small businesses.

BEBINGER: Jon Hurst, President of the Retailers Association of Massachusetts, says covering the uninsured was supposed to help lower insurance rates for everyone. Health Care economists still predict a modest decline, but not anytime soon. Hurst says small businesses, which typically see the largest premium increases, can't absorb another hike.

HURST: We are on track for our eighth year in a row, perhaps ninth year in a row of double digit increases for small businesses. And that is something that is squeezing, particularly in this economy, small businesses. I can tell you there are untold numbers that are struggling; they are in the red right now. I'm really afraid we're going to see nearly unprecedented levels of small business failures.

BEBINGER: There's little short term relief in sight. At Tufts Health Plan, where premiums are expected to rise 9% next year, Senior VP for Sales, Brian Pagliaro, says doctors continue to prescribe and patients continue to use, more, expensive care.

BRIAN PAGLIARO: In patient hospital services, we're seeing a tick up there. We're seeing prescription drug utilization coming a little bit higher. And we also continue to see high tech imaging as another cost driver.

BEBINGER: The state will scrutinize these factors as well as insurance company reserves and the plans' administration costs during hearings next year. The hearings are part of a new state law that supporters say will cut health care expenses. But Health and Human Services Secretary JudyAnn Bigby says how the law will affect premiums is unclear.

JUDYANN BIGBY: I have confidence in some of our leading health plans that they understand the importance of affordable health care and that they will do everything they can to limit the growth in premiums, but its hard to anticipate how savings translate dollar for dollar into health care premiums.

BEBINGER: Bigby says the most effective way to reign in health care costs will be to stop paying doctors for how much they do for patients and start reimbursing them based on the quality of care and their patient's health. Some insurers are testing the idea. Several studies show that patients in Massachusetts get more care than Americans, on average. We see a specialist twice as often and use more prescription medicine. Brandeis University Health Policy professor Stuart Altman says reversing that pattern will be difficult.

STUART ALTMAN: As a patient myself, obviously, I don't want to have less services if these services help me. What we need to know is, are these services really adding value, improving the quality of health care for Massachusetts residents.

BEBINGER: There is no objective source that answers Altman's question right now although pending federal legislation would create such a research center. There are other theories about the best way to cut health care spending. Perhaps patients need to become savvy consumers.

VINCENT CAPOZZI: Americans love to shop, the one place we don't shop is health care.

BEBINGER: Vincent Capozzi is the Senior VP for Sales at Harvard Pilgrim Health Care.

CAPOZZI: We chose providers on the basis of relatives, friends, coworkers and not on the basis of quality, cost, efficiency and the best place to get the service. That would have as much, if anything, the greatest impact on driving the trend down.

BEBINGER: Harvard, by the way, expects to raise premiums 6-11% next year. Fallon Health Plan rates will be 8-12% higher. The state is working on a website that will offer cost and quality comparisons for medical procedures, but there have been several delays and the launch date is still uncertain. Even some its supporters wonder how many people will use it.
Will you?

This program aired on September 10, 2008. The audio for this program is not available.

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