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Monday, September 22, 2003The biggest factor behind rising health-care costs is medical ad vances - new drugs, de vices, treatments and testing, accord ing to a study by Pricewaterhouse Coopers LLC. Such advances added 3 percent, or $15 billion, to health-care costs between 2001 and 2002, according to the accounting and consulting firm's study. Prescription drug prices 'have pretty much spiraled out of control,' said Keith Carnahan, benefits consultant at CBIZ Benefits and Insurance Service of Ohio Inc. in Independence. More drugs are helping us live better and longer. But they come at a steep cost, Carnahan said. We do prescribe more costly drugs these days, but not all of them help us live "better and longer." Service providers, such as doctors or hospitals, are ordering more tests with costly technologies. "Every provider has an income target," said Werner Gliebe, a vice president in the Cleveland office of employee benefits consultant Segal Co. "We don't control the number of units of service that are ordered by a provider." Hospitals and other providers are passing on their own increasing costs. After under-investing in their physical plants during the mid- and late 1990s, hospitals are again building and renovating, the study said. Meanwhile, industry consolidation and rising patient admissions mean fewer care providers, so they have the leverage to raise their prices. That one's a bit dubious. Hospitals and doctors can't increase their prices - Medicare mandates how much they can charge. One could argue that some specialists order tests - which they then interpret for a fee - to boost their income, but most doctors don't get reimbursed for the tests they order. Growing government mandates and regulation added $10 billion to health-care costs during the study period, PricewaterhouseCoopers said. The U.S. Department of Health and Human Services estimates the cost of complying with just one law - the Health Insurance Portability and Accountability Act, which makes sure workers who switch jobs get health insurance - was $3.8 billion over five years. That I can believe, although it isn't just the portability part that's added costs, it's also all the effort and paperwork that's needed to protect privacy - or to at least provide the illusion of protecting privacy. We use more medical care as we get older. And members of the aging baby boom generation, the oldest of whom are approaching 60, want the best care available. Which is one reason the managed care model has failed. It was just too easy to paint the insurance companies as villains whenever they denied the latest cutting edge care - even if its benefits were dubious. On top of those factors pushing the cost of health care up, something else is driving rates for health insurance. Health insurers are consolidating, Klonk said. Only five or six major insurers serve midsize companies in Greater Cleveland, half as many as a decade ago, which means that employers have fewer choices and that insurers have the leverage to raise prices or limit coverage. "The market is very limited," Klonk said, especially for employers that have sicker workers. Although the market is improving because remaining carriers are profitable, the whole of the insurance industry has "minimal capacity for risk," he said. Another reason that health insurance should be divorced from employment. Bigger risk pools can only help both the insurance companies and the insured. posted by Sydney on 9/22/2003 08:02:00 AM 0 comments 0 Comments: |
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