In Mass., Health Insurance Rates Continue Sharp Rise

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The cost of many goods and services in Boston is expected to rise a little more than 1 percent next year. But the cost of health coverage will be in a league of its own.

The state’s top three insurers say they are negotiating plans for large employers that range from a 4 to 14 percent increase. This dramatic difference between health care and the cost of other basic needs forces the question, are we going to slow health care spending?

WBUR's Martha Bebinger and Bob Oakes discuss what’s going on with health insurance and the politics around this issue.

Q: Blue Cross Blue Shield is projecting the lowest increases, isn’t that unusual?

Yes, Blue Cross, the state’s largest insurer, is typically a bit higher than Harvard Pilgrim or the Tufts health plan. But for the beginning of 2011, Blue Cross says its rate of increase will be lower than usual, in the 4 to 7 percent range.

Blue Cross says it's doing a better job of managing patients — the 5 percent of patients who consume 50 percent of the health care dollar. It also points to new budget-based contracts with hospitals and insurance plans with incentives for patients to use hospitals with the best balance of cost and quality. Next year, insurance through Tufts will rise, on average, 10 percent and plans through Harvard Pilgrim will go up 8 to 14 percent.

Q: These rates are for large employers with 50 or more workers, not for small businesses, right?

Yes, these rates apply to about 70 percent of residents who have private insurance. The rate increases for small employers, which prompted lawsuits and a new law earlier this year, are going up again even faster than the rates for large employers.

Q: We've had a decade of rate hikes in health insurance at 10 percent or higher, what's driving this?

The insurers say that it's how often we get care, what kind of tests and treatment we receive and where we go for that care. Some providers can and do demand much higher prices. We as patients get tests that are more expensive than others and most of us, doctors included, have no idea how much anything costs, so we don't think about whether, or where we go makes any financial sense.

Medical programs like Medicare and Medicaid do limit their spending, so the doctors and the hospitals make up the losses on those patients on other people, the private insurance members.

There are also some people who think the insurance companies are the problem because they spend too much money on administration — there's lots of things going on.

Q: Given the higher rates, what kind of changes might consumers see?

In order to keep the rates from going up even higher, we will see higher deductibles: $1,000 had been the accepted rate in Massachusetts, but it could go up to $1,500 or $2,000. We're going to see higher co-pays, we're going to see tiering for doctors and hospitals; you know the way we pay different co-pays for prescription drugs now, you'll see that for doctors and hospitals as well.

Q:Right, some drugs you pay more for, so now some doctors and hospitals you'll pay more for?

Based on their rating, exactly. And in that prescription drug tiering, Harvard Pilgrim is rolling out a fourth tier, where the really common antibiotics and common generics will be just a $5 co-pay, similar to what we see for Walmart.

Q: So cheaper drugs?

Much cheaper drugs.

We're also going to see an emphasis on wellness programs, you know, they're trying to get your employees healthy so that they won't be sick as often and won't use as much medical care. Employers have been reluctant to do that, but Harvard Pilgrim Senior Vice President for Sales Vin Capozzi says employers have to get more involved.

"If you have more engaged employees, healthier employees, you'll have a better workforce and a better outcome. It's in everybody's interest to go in this direction and we're certainly, as an employer, we're doing the same," Capozzi says.

So, there's Harvard Pilgrim employees, we here at BU fill out a health risk questionnaire. Tufts says it's holding its health care cost increases at 3 percent, in part by keeping employees healthier.

Q: Nationally, the average increase for a family plan is expected to be around 3 percent. Why is the increase in Massachusetts higher?

In general, nationally, employers are shifting more of the cost increases to workers across the board with higher co-pays and deductibles. They're doing that because they, in this recession, have been trying to preserve jobs and the health benefit is shrinking. And health care costs are higher here: we go to high-end hospitals for fairly routine tests and procedures and we have, for the most part very good insurance, its pays for lots of care.

Q: Given all of this, what's on the horizon in terms of holding health care costs down?

The focus is on setting budgets, not really per patient, but for a group of patients. The doctors and hospitals get bonuses if the patient does well, so the incentive is on primary care, to keep people from getting sick. But this would be a big change for everyone in the system and Senate President Therese Murray is not pledging to get something done next year.

She said last week that she's been pushing this issue for many years and isn't sure when the state will begin any significant payment reform.  It has not been a top priority in the House and we don’t know who will be in the Corner Office.

Q: Is there a discussion of at what point patients will be made more responsible for their own health? If some of the responsibility for patients' health might shift to doctors, under these plans to help hold health care costs down, might at some point patients be held more responsible too?

I think insurers would say that we're seeing that now, as more of the costs shift to the patient, so that if they become more cost conscious they might shop more for better quality care at the best cost — that's where we're seeing patients being more involved.

Can you still afford health insurance?  Are you changing where or when you get care based on the cost?  What are your suggestions for lowering the cost of health care? Martha Bebinger and Brian Rosman, with Health Care For All, held a live chat Tuesday.

This program aired on October 5, 2010.

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Martha Bebinger Reporter
Martha Bebinger covers health care and other general assignments for WBUR.



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