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November 13, 2001
'Employees Need to Feel the Pain'
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Some of the highest health insurance rate hikes in a decade are leading to jumps in employee premiums, co-pays and deductibles, according to the Observer.
Many employers, fearing the loss of valued employees, are absorbing as much of the rate hikes as they can. But in a stagnant economy, companies can handle only so much of the additional cost. And in the Charlotte area, those increases are reaching as high as 30 percent.
No employers are saying they will drop health insurance for workers. But there is tough talk out there, said Kevin Gill, director of compensation and benefits for the Employers Association of Charlotte.
Gill was at a meeting last month of local employee benefit specialists about rising health insurance rates. The theme was that employers have to share that cost with their workers, he recalled.
"The theme," he said, "was, the employees need to feel the pain."
The North Carolina Department of Insurance is reporting a 19 percent rate increase for HMOs active in that state, based on what they charge companies with 51 or more employees.
HMOs represent less than 20 percent of insurance coverage in North Carolina, so that's only a small piece of the rate picture. But the department doesn't track increases for PPOs, traditional indemnity plans and others, a spokeswoman said.
The South Carolina Department of Insurance has not gauged overall health insurance rate increases, but officials there tell the Observer that they believe the state is seeing increases in the 13 to 16 percent range cited by Hewitt.
Health insurers say rising drug costs and increasing hospital and doctor's office visits largely drive the rate increases. "Health care inflation is back," said Karen Ignagni, president of the Washington, D.C.-based American Association of Health Plans.
That's because managed-care plans were weakened, she added.
More than half of North Carolina's HMOs lost money during the first half of this year. Some shut down or were absorbed by other insurers. Others shifted their focus, such as QualChoice of North Carolina, a Winston-Salem-based insurer that this month announced it would discontinue employer group coverage and concentrate on Medicare patients.
Some HMOs are profitable, but all have lost the ability to rein in costs because of legislative coverage mandates and other measures that put an end to primary-care physician gatekeeping and other cost controls, Ignagni said.
Managed care proved unpopular with many patients, who wanted more freedom to see the physician or hospital of their choice. But freedom comes at a price, observed Sandra Greene, a consultant who formerly was a vice president of Blue Cross and Blue Shield of North Carolina.
"When you remove restrictions, the costs go up," she said.
To view the Charlotte Observer article, click here.
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