The diagnosis: Our health-care system is in critical condition.
The prognosis: Unless strong measures are taken, it's good-bye, small business.
Are your current health-care costs threatening your business?
Which of the following cost-containment measures have you tried? Which has been the most effective?
Increased deductible 67% 20%
Switched carriers 57% 22%
Required employees to pay a 46% 25%
portion of the cost
Reduced coverage 43% 12%
Switched to or added HMO/PPO 31% 27%
Instituted second opinion/ 21% 2%
Became self-insured 14% 46%
Switched to cafeteria-style plan 13% 18%
Joined a larger group plan 11% 32%
Initiated wellness programs 11% **
Instituted preemployment screening 11% **
Ceased to provide health insurance 7% **
Initiated internal claims analysis 3% **
* Percentage of those who tried measure who found it to be their most effective measure; ** Less than 2%
How much have your health-insurance costs increased over the past three years?
Not at all 1%
Less than 10% 4%
10% to 50% 52%
51% to 100% 28%
More than 100% 12%
Who is most responsible for the increasing cost of health insurance?
Insurance companies 19%
Combination of everyone 13%
Hospital administrators 11%
Federal government 10%
Companies of all sizes are seeing their health-care costs rise significantly. Forty percent of our respondents have experienced increases of more than 50% over the past three years -- a trend most find threatening. Small employers in particular feel "at risk of becoming uninsurable, with no alternative at any price."
Is there anything you can do to stem the rise in costs? Increasing your deductible, the most frequently tried strategy, diverts part of the financial burden to the employees and cuts down on "frivolous visits." Requiring employee contributions allows businesses to "provide the same coverage but keep costs down." But both strategies can make it "harder to attract new employees and retain old ones." Switching carriers is another favored tactic: 21% of you have switched twice or more in the past five years. Some of you change companies every time your premiums increase, "which is almost annually." For some, this strategy isn't an option: "We can't change coverage because of health problems. We're trapped." Switching to a preferred-provider organization "ensures reasonable fees at the doctor's office," respondents told us. Reducing coverage can "lower out-of-pocket expenses, with benefits that are still good." But others said that might yield "slightly lower costs but vastly lower care." Cafeteria-style benefits "allow best choice and most effective use of companies' and employees' money," and the employees feel involved in the decision. Other programs that had their advocates include wellness programs and preemployment health screening. ("We hire healthier people," which "prevents problems.") Forty-six percent of those who tried self-insurance found it to be their most effective measure. Still, some of you said nothing seems to work: "We shop prices, change carriers, and lose time and money without reducing the cost of coverage."
When pressed for a single cause, readers not-so-reluctantly pointed their fingers at the lawyers: "We are a litigation-crazed society fueled by attorneys." The threat of huge awards in malpractice suits forces doctors to "practice defensive medicine" characterized by "more expensive malpractice insurance, and unnecessary tests." We all wind up paying for those policies and settlements in the end: "Doctors and hospitals pass the costs along. It's a vicious circle."
Some blamed insurance companies, with their "astronomical profits and no cost containment." Others accused hospital administrators of overcharging to "cover the costs of indigent patients."
When we asked who is in the best position to do something about the problem, your answer was unequivocal: it's time for the government to intervene. Many urged a cap on doctors' pay or hospital costs. Others suggested limits on malpractice-suit awards, tort reform, a cap on lawyers' fees to reduce "their motivation to sue," and legislation to control medical-while others vociferously objected to the notion, saying, "The cost of such a program would translate into excessive taxes, billing fraud. Several called for a national health-care plan, and the result would be disastrous." Another said, "We are paying dearly for health care now; surely we can afford a national health plan that is controlled and fair."
-- Christopher Caggiano