Health care premiums for California businesses skyrocketed 138 percent between 1999 and 2008. Last year, premiums jumped 8.3 percent compared to a 3 percent increase in consumer prices. The annual premium for a family plan is $13,427, with single coverage at $4,906. Transferring these costs onto consumers is not easy, especially in an economic recession when families seek ways to tighten their purse strings.
Smart Business talked with Barry Arbuckle, Ph.D., president and CEO of MemorialCare Medical Centers and past chair of California Hospital Association, to learn more.
How serious is the situation?
The number of California’s uninsured and underinsured nears 14 million. This means nearly half the state too often ends up in crowded, costly emergency rooms instead of a doctor’s office where their health can be monitored and conditions identified before they worsen. Employers are reducing or eliminating health benefits to stay afloat. About 25 percent of workers go without health coverage because of an inability to pay out-of-pocket expenses or belief they will not need medical care, which rarely occurs. Of the uninsured, 30 percent are eligible for government subsidized programs yet do not access them. While workers’ compensation insurance rates have dipped, rate hikes are looming, as are tax spikes. Meanwhile, businesses cannot risk raising prices in fear that may turn away customers.
What’s the impact on hospitals?
California hospitals lost $11 billion last year due to nonpayment of medical bills. Government reimbursement is less than it costs to provide care. Hospitals receive only 87 cents on the dollar from Medicare and 67 cents on the dollar from Medi-Cal. More cuts are likely. Hospitals will be forced to further cost shift to private payers or join the dozens of facilities that closed over the last decade due to financial losses and inability to pay for unfunded state mandates like earthquake compliance regulations. While mandates may be necessary, lack of outside or government financial support is breaking the backs of our critically needed health facilities 56 percent of which are posting losses.
How can employers trim costs?
Businesses should partner with their employees, health plans and hospitals to identify solutions. While raising employee deductibles and premiums works in the short term, other approaches are available. Rather than lose customers, some payers are willing to renegotiate rates and arrange ways to reduce costs. One way may be to lower premiums by offering more than one health plan option with a fixed dollar contribution no matter which plan is selected. Qualified, high-deductible health insurance plans without co-pays for office visits or prescriptions have generally lower premiums than traditional plans. Some employers do provide raises for employees to purchase their own health coverage or possibly join their spouse’s employer-sponsored plan.
What other services are offered?
The MemorialCare business outreach services do include employer programs that reduce your health benefits burden and improve employee health. Benefits audits identify savings and can lower workers’ compensation claims. Executive and employee physicals spot health issues before they become serious and provide wellness regimens to stay fit. Programs in the community and at your business ensure a healthier, more productive work force. Memorialcare.org has free online tools, calculators, guides and referrals to physicians to help your work force achieve a healthier life.
What’s in store for health reform?
Per his campaign promise, President Obama is now addressing the extremely complex issue of health care financing. We will likely see movement among issues of the uninsured, requirements for health plans to offer a basic coverage option, limitations on refusal of coverage for pre-existing conditions, competitive prescription drug pricing and regional variations on how health care is offered. Those of us entrusted with care of our communities agree that what is also needed is a systemic reform in how patients are cared for.
MemorialCare’s President’s Partnership informs and engages employers large and small on issues all organizations face and seeks solutions to address the challenges and costs of health care. Working together, businesses can identify improvements and advocate for better care for the communities they serve.
MemorialCare is hosting a program Oct. 20 on how health care affects your bottom line. It brings together business leaders like you with experts to discuss solutions to the crisis we all face. Those interested in this complimentary program can call (714) 377-2909 or register at memorialcare.org/prespartnership.
BARRY ARBUCKLE, Ph.D., is president and CEO of MemorialCare Medical Centers (www.memorialcare.org) and past chair of the California Hospital Association. Reach him at firstname.lastname@example.org or (562) 933-9708. MemorialCare Medical Centers include Saddleback Memorial Medical Center in Laguna Hills, Orange Coast Medical Center in Fountain Valley, Long Beach Memorial Medical Center, Miller Children’s Hospital in Long Beach and Saddleback Memorial Medical Center in San Clemente.