For more than a decade, health insurance costs have increased at a rate deemed unsustainable by health care industry professionals.

The Greater Houston area and Texas are not immune; the 13 insurance carriers in the state offered through the national health insurance marketplace have proposed 2017 rate increases up to 60 percent.

And employers are shifting more costs to employees as plans require more coverage options, said William Short, CEO of national human resources firm
Ameriflex.

“Employers are going to have to become and are becoming very creative,” he said.

Health care and insurance industry professionals attribute the increases to  myriad factors but acknowledge some core issues: federal regulations that require employers to cover more than before, more cumbersome insurance plans and rising medical service costs.

Marah Short, the associate director of the Center for Health and Biosciences at Rice University’s Baker Institute for Public Policy, said the cost of health care is growing faster than the economy itself.

“I expect that there is some growth in premiums just because of the different items insurers are required to cover, such as preventive care [and] annual care,” Marah said.

To manage their costs, experts like Joel White, president of the Council for Affordable Health Coverage in Washington, D.C., advocate individuals stay informed of their options.

He speculated if the situation remains unchanged, the average American family could be spending half its income on health care by 2030.

“This is [a] serious problem that is impacting people at a very real level,” he said. “My sense is smart policymakers, smart politicians will start trying to drive costs down.”

Cost of care

Nearly 140 million people—roughly 43 percent of the U.S. population—receive insurance from employers, William Short said.

Among the providers staying in the exchange, Blue Cross Blue Shield cited a potential premium increase of 60 percent on the exchange in 2017, saying it lost $770 million in 2015.

Humana will also offer a plan but is reported to have a premium increase of 45 percent, according to www.healthinsurance.org.

Blue Cross Blue Shield also stopped offering a preferred provider organization plan—or PPO—on the exchange in 2016. Only two PPOs remain available on the exchange in Houston, and the rest are more costly health maintenance organization—or HMO plans—said Travis Middleton Jr., president of TradeMark Insurance Agency in the city.

Marah said the sticker shock of insuring more people was likely a reason some carriers pulled out of the insurance exchange.

“We do have people on insurance who hadn’t had it before, maybe they had pre-existing conditions or had some kind of chronic condition,” Short said.

Ken Janda, president and CEO of Community Health Choice, a nonprofit health plan available in the Greater Houston area, said the longer patients are insured, the lower insurance costs will be for everyone.

“We believe that, long-term, someone who has been insured for 10 or 15 years and has had more preventive care services will save us money,” Janda said.

“The main drivers of the increasing cost in the marketplace [is] the people that we actually signed up have turned out to be older and sicker than we thought they would be.”

At CHI St. Luke’s Health-Sugar Land Hospital, CFO Bill Beauchamp said increasing insurance and pharmaceutical costs creates a trickle-down effect, giving patients a bigger bill.

“From a hospital side, we have to go out there and try to collect from the individual after the insurance pays,” he said. “And these high deductible plans make it difficult for people to pay.”

Employers take measures

Deductibles on employer-provided insurance plans are increasing to keep employee premiums down, according to the Kaiser Family Foundation, a non-profit that collects data on health care.

Following that trend is Fort Bend ISD, which increased its deductibles for 2017. The school district also switched from Cigna to United Healthcare and eliminated out-of-network costs. FBISD is incentivizing its nearly 10,000 employees to join United Healthcare’s charter plan with Kelsey-Seybold Clinic.

“I think that will have a material impact,” Bassett said.

Trimming the fat

The upward trend of health insurance costs shows no signs of slowing, but industry professionals said remedies are available. Improving medical efficiencies and informing patients are recommended as well as policy changes from a national level, White said.

He and Terry Wheeler, CEO of Cypress Fairbanks Medical Center Hospital, said competition should be more robust among hospitals and insurance carriers in order to drive down costs.

“If you only had the choice of three banks or four banks [for example], there would be fewer and fewer options and you would have higher interest rates,” Wheeler said.

Memorial Hermann is the only Houston hospital system that offers its own insurance plan. Dan Styf, CEO of the Memorial Hermann Health Plan, said that collaboration between care and insurance allows it to reduce costs. The plan currently covers 70,000 people.

“It is becoming a popular option because health care systems with traditional insurers are very fragmented,” Styf said. “Our system enables the insurer and health care delivery system to align their interests to the same side.”