For more than a decade, health insurance costs have increased for both individuals and groups at a rate deemed unsustainable by health care industry professionals.
The Greater Houston area and Texas are not immune, with the 13 carriers offered throughout the state through the national Health Insurance Marketplace proposing 2017 rate increases as high as 60 percent.
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.
Fewer options offered by the marketplace statewide will further reduce what experts say is a lack of competitive pricing by hospitals and insurance carriers.
Since the Affordable Care Act was implemented in 2010, the number of uninsured individuals has decreased , but more than 1 million remain uninsured in the Greater Houston area.[/caption]To manage costs, experts like Joel White, president of the Council for Affordable Health Coverage in Washington, D.C., said individuals should stay informed of their options. He speculated if the situation remains unchanged, the average U.S. 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 policy makers, 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, according to national human resources firm Ameriflex. Most people find this more cost-effective than going through the exchange for insurance, said Marah Short, associate director of the Center for Health and Biosciences at Rice University’s Baker Institute for Public Policy.
“Whenever you move to the exchange, you don’t get anything subsidized because your employer and employee are both paying for it,” she 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 the company lost $770 million in the marketplace during 2015. Humana will also offer a plan but is reported to have a premium increase of 45 percent, according to healthinsurance.org.
Short 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,” she said.
Ken Janda, president and CEO of Community Health Choice, a nonprofit health plan available in the Greater Houston area, said as patients are insured longer, insurance costs will likely decrease.
“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.”
Employers take measures
As insurance costs increase, Tomball and Magnolia employers—including the cities themselves—are taking steps to lessen the burden on their employees.
Lisa Coe, human resources director for the city of Tomball, said the city and its employees shared the increase in insurance costs this fiscal year. According to previous comments from city officials, costs increased by 16 percent, causing employees to pay an additional $5 per pay period for medical insurance and 50 cents for dental insurance.
Magnolia city officials said the city’s insurance costs increased 5.3 percent for FY 2016-17. However, the rising costs only affected the city’s budget since the city pays the total insurance cost for each employee, City Administrator Paul Mendes said.
Over the years, a number of decisions were made that greatly affected the health care options for Texas residents. These decisions coincided with growth across the board of heath care premiums[/caption]“Many organizations require a contribution from the employee, but with Magnolia, they pick up the whole cost of the employee,” he said. “[The increase] doesn’t [affect the employees] at this time. However, we may get to a point where the employees will have to contribute a little bit to their policy.”
Officials with Tomball and Magnolia ISDs also said the districts have tried to absorb some of the increased costs. However, district officials said they have limited insurance options to work with because of the Teacher Retirement System ActiveCare insurance plan, which the state mandated for a majority of Texas school districts in 2002.
“The district is obligated to [TRS-ActiveCare] until the law is changed allowing school districts an option to leave the state’s plan and select other available plans,” TISD Chief Financial Officer Jim Ross said.
Because of rising costs and the state-implemented plan, MISD Assistant Superintendent of Operations Erich Morris said district officials discuss regularly whether to increase salaries for all employees or increase the district’s contribution to health insurance in which two-thirds of MISD employees enroll.
“Approximately every percentage raise costs about the same as every $50 increase per month for health insurance,” he said.
MISD has not increased its contribution for three years, Morris said. However, the district has increased salaries for all employees for the last four years.
TISD increased its monthly contributions by $25 per employee for FY 2016-17, which increased the budget by $440,360, Ross said.
Trimming the fat
The upward trend of health insurance costs shows no signs of stopping, but industry professionals said remedies are available. Improving medical efficiencies and informing patients are recommended as well as policy changes from the nation’s Capitol, White said.
He said competition should be fiercer among hospitals and insurance carriers to drive down costs. White said greater transparency from hospitals and carriers would help patients make more informed decisions about procedures.
Employees are also using other resources, such as health savings accounts, health reimbursement arrangements and indemnity plans, to offset deductibles, according to Ameriflex and the Kaiser Family Foundation.
Hospitals are trying to help cut costs as well. The Memorial Hermann Health System is the only hospital system in the Greater Houston area that offers its own insurance plan, which allows the hospital system to reduce costs, said Dan Styf, CEO of the Memorial Hermann Health Plan. While the plan only covers 70,000 individuals now, it has grown in recent years, he said.
“Our system enables the insurer and health care delivery system to align their interests to the same side,” Styf said.
To help patients understand insurance, Tomball Regional Medical Center offers financial counseling, Marketing Manager Sylvia Saumell-Baston said.
“We know health care billing can be complicated,” she said. “Financial counselors work with patients to help them understand their financial responsibility, including co-pays, deductibles and, in the case of uninsured patients, if they are eligible for discounts or financial assistance.”
