Sizable Health Care Cost Rise Seen
JUNE 03, 03:31 EDT
By JOHN HENDREN
AP Business Writer
NEW YORK (AP) - Many employers will get a little
something extra in their health plans in 1999:
double-digit cost increases.
Health care rates increased only 3 percent to 5 percent
a year from 1994 to 1996, but employers are expected
to face substantial jumps in health care costs in 1999.
''I think the honeymoon's over,'' said Henry Moyer, a
health care consultant with Hirschfeld Stern Moyer &
Ross in New York.
Traditional plans that let the patient choose the doctor
will raise costs the most, 12 percent to 15 percent,
according to health care consulting firm Watson Wyatt
Worldwide. Health maintenance organizations will raise
prices 5 percent to 7 percent. Prescription drug plans in
which pharmacies charge insurers directly will cost 15
percent to 22 percent more.
Costly health care mergers, ''lifestyle'' drugs like
Viagra and an aging population are expected to lead to
double-digit increases in health care costs next year.
Many health insurance companies lost money last year,
and they are going to be less willing to hold the line on
rates for 1999, analysts say.
Analysts say employers will simply pass on the added
costs to employees. For many workers, that probably
means health plans that offer fewer choices. Or it could
mean higher copayments, premiums and deductibles.
''This is the final betrayal of the HMO promise,'' said
Jamie Court of the Santa Monica, Calif., group
Consumers for Quality Care. ''HMOs basically can't be
trusted to manage your care or manage your bills.''
Watson Wyatt Worldwide issued its estimate this week
based on an informal survey of 445 executives who buy
health care coverage in companies with more than 500
employees in large metropolitan areas.
Only 49 percent of insurance plans made money last
year, according to researcher InterStudy Publications.
''The insurance companies and HMOs have
underestimated the rate of increase in the cost of
providing managed care,'' said John Salek, a vice
president and health care analyst at REL Consultancy
Group. ''I think a lot of these insurers just lowballed
the price to get marketshare.''
At the same time, insurers such as Aetna U.S.
Healthcare and United Healthcare are coping with
expensive mergers. Consumers are pressuring
companies to cover new ''lifestyle'' drugs such as the
$10-a-pill impotence tablet Viagra and the newly
approved weight-loss drug Meridia. Pharmaceutical
companies are developing higher-priced drugs. And the
baby boom generation is aging, developing more
ailments.
Insurers say they have little choice but to raise rates.
Kaiser Permanente, the nation's largest HMO, has
already told employers it will seek increases of up to
12 percent. Kaiser is making up for small increases in
recent years, spokeswoman Beverly Hayon said.
With the introduction of Viagra, ''it's clear that
demand for that pill alone could exceed what we spend
on all the antibiotics put together, which would be well
over $50 million a year,'' Ms. Hayon said. ''I don't
think lifestyle drugs have been as much a factor in the
past.'' |
