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Healing health care

Reducing costs

Why doesn’t everyone have health insurance? For most who don’t, the answer is straightforward—because it’s too expensive. In fact, skyrocketing costs are at the heart of the health care problem. “Whether you’re insured or you’re not insured,” says Bob Patricelli, chairman and CEO of Avon-based Women’s Health USA, “you’re a victim, to some extent, of rapidly rising health care costs.”

According to Stamford-based professional services firm Towers Perrin, health care costs have increased by 33% nationally since 2004. The firm’s survey of 321 large employers also shows the average corporate health benefit expenditure in 2009 will be $9,660 per employee, a 6% increase over the 2008 figure.

In Connecticut, employers consistently cite health care costs as their most problematic business expense. CBIA’s 2008 Survey of Connecticut Businesses showed that 94% of respondents saw an increase in health care costs in 2007, and 55% reported increases of 10% to 20%.

A key factor behind rising costs in Connecticut is the state’s chronic underfunding of Medicaid and other public health care programs. “The state is underfunding Medicaid to hospitals about $300 million a year,” says Jennifer Jackson, CHA’s president and CEO. To fill in the gap and remain solvent, hospitals have to cost-shift—charge higher fees to privately insured patients, which results in higher insurance premiums for employers. When cost shifts for Medicaid are combined with those for uninsured patients, employers’ hospital bills are increased by approximately $400 million annually, and the premiums they pay are 15% higher than the actual cost of the care provided.

Another significant cost driver is Connecticut’s high number of benefit mandates—state laws that require insurers to cover certain medical procedures and services. Mandates force insurers to increase premiums and, as a result, make coverage too expensive for many. In a recent report, How to Make Health Insurance Affordable: 2008, the National Center for Policy Analysis estimates that 25% of the uninsured in the U.S. are priced out of the market by state mandates. In 2007, Connecticut had the fifth highest number of mandates in the country, according to the Council for Affordable Health Insurance. Lawmakers added three more mandates during last year’s General Assembly session.

CBIA and its coalition partners advocate that the state take the following steps to lower the cost of health care in Connecticut:
• Increase reimbursements to providers under the Medicaid, HUSKY, SAGA, and Charter Oak programs in order to eliminate cost shifts from the public to the private sector, stabilize hospital finances, and increase the number of health care professionals who accept patients with coverage under those programs.
• Enable employers to purchase health care plans that are appropriate for them and their employees, particularly by not burdening small businesses with expensive new health benefit mandates.
• Exempt small employers from the state’s 1.75% insurance premium tax if they offer and maintain comprehensive wellness and disease management programs. The state should also educate small employers and the public about the importance of healthy lifestyles and wellness programs.

Increasing access

The main barrier to health care coverage is cost: As costs rise, the number of people without health insurance also increases, either because their employers can’t afford to offer it or because they themselves decline to participate in it. In Connecticut, 325,500 residents (roughly 9% of the state’s total population) are uninsured.

Making health care more affordable by implementing the above reforms—especially increasing reimbursements under Medicaid and other public health care programs—will, by itself, dramatically reduce the number of uninsured. In addition, CBIA and its coalition partners urge state policymakers to implement the following recommendations to help increase access:
• Maximize outreach efforts for HUSKY and other public health care programs to enroll as many eligible children and adults as possible. According to a 2006 report by the Connecticut Health Insurance Policy Council, A Framework for Health Care Reform for Connecticut, an estimated 22% of uninsured residents who are eligible for the HUSKY program are not enrolled.
• Expand the use of community- and school-based health centers and work with these centers to educate people about the services and value they provide.

Help make it happen

Achieving the health care reforms advocated by CBIA and its coalition partners will take involvement from all stakeholders—including Connecticut’s business community. If you would like to help move our health care reform agenda forward, here are some things you can do.
• Learn more by watching CBIA’s 10-minute video “Health Care Reform: A Commonsense Approach,” available at cbia.com. In the video, business and health care executives discuss the direction health care reform should take in our state and the potential impact a government-run system could have on our economy. Feel free to post a link to it on your own Web site and share it with your employees, vendors, and customers. Also, visit cbia.com throughout the General Assembly session for information and updates on health care legislation.
• Call or write to your state legislators and encourage your employees to do the same. Urge your state senator and representative to support reforms that will strengthen our current employer-based health care system. Let them know how rising costs affect your company’s health benefits and ability to create new jobs. For contact information, go to www.cbia.com/gov/getinvolved.htm and click “Find your legislators” near the bottom of the page.
• Contact CBIA’s Eric George at 860-244-1921 or eric.george@cbia.com if you are interested in testifying at a health care hearing or learning about other ways you can help advance our health care reform agenda.

“Our health care system is certainly far from perfect,” says CBIA’s Rathgeber. “But Connecticut does a better job insuring people through employer-sponsored health insurance than almost any state in the country. With improvements, our system—and its public ‘safety net’ for those who can’t afford health insurance—can be a model for the nation

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