Copyright 2000 Globe Newspaper Company
The Boston
Globe
October 15, 2000, Sunday ,THIRD EDITION
SECTION: NEW HAMPSHIRE WEEKLY; Pg. 1
LENGTH: 1287 words
HEADLINE:
NEW HAMPSHIRE WEEKLY;
INSURERS FORECAST SHARP HIKES
HEALTH-CARE RATES GIVE EMPLOYERS FEW OPTIONS, OFFICIALS SAY
BYLINE: By Ralph Jimenez, Globe Staff
BODY:
CONCORD - For the third straight year, the
price of health insurance in New Hampshire will rise by
double-digits.
The higher premiums under review are worrying employers
who cannot easily pass the increases on to employees. With the unemployment rate
at 2.9 percent, the job market is too tight for that. The hikes have also raised
fears that the rolls of the uninsured, which fell last year,
will begin growing again.
"I see ours in the
mid-teens," Clark Dumont, spokesman for Anthem Blue Cross Blue Shield of New
Hampshire said of price increases for managed care contracts for the year 2001.
"Prescription drug costs are clearly the leader driving the increase." An
insurance industry shakeout has left employers few options. Five companies are
licensed to sell managed care insurance in New Hampshire, but three cover
relatively few people. Between them, Anthem and Cigna Healthcare of New
Hampshire control about 90 percent of the state's managed care market.
"We saw a dramatic escalation of medical costs in the first and second
quarters of 2000," said Brian Wells, president and general manager of Cigna New
Hampshire.
Premium increases, which fell just beneath double digits
three years ago at Cigna, will average between 15 percent and 20 percent for the
second year in a row, Wells said.
Despite those increases, Cigna's New
Hampshire subsidiary lost nearly $750,000 in the first six
months of this year, according to insurance department filings.
"We will
continue to work diligently to ensure that quality care is affordable, but
ultimately these costs are passed on to employers and employees through higher
premiums. We worry about how long employers in New Hampshire will be able to
afford them," Wells said.
Both Anthem and Cigna are for-profit insurance
companies. Anthem is a mutual insurance company owned by its members in the
Midwest. Cigna is a publicly traded company whose stock hit an all-time high
this month.
"I haven't seen a filing from Harvard Pilgrim, Aetna or US
Healthcare yet, but far and away, the two biggest players are Cigna and Anthem,"
said David Sky, a life and health insurance actuary with the state's insurance
department. "Anthem made a small group filing for January 1 and those numbers
were around 15 percent."
Insurance premiums in the nongroup market
serving individuals will probably rise by an average of about 20 percent, Sky
said. About 850,000 New Hampshire residents have health insurance, but only some
20,000 people are in the more expensive, nongroup fully-insured category.
"For uninsured adults who cannot afford to buy into the individual
market but who don't qualify for Medicaid - I don't know what to say," Sky said.
Nationally, managed care companies that survived several years of tough
competition for market share are prospering again. On Wednesday, analysts at the
Lehman Brothers brokerage firm predicted higher earnings and stock prices in
2001 for four of the nation's major insurers. Among them was Cigna.
Managed care prices have risen faster in the East than in the nation as
a whole, said Jack Bruner, a health care specialist with Hewitt Associates, an
international human resources management consulting firm.
"We are just
rolling up our trend analysis for the year right now," Bruner said in a
telephone interview from the firm's Illinois headquarters. "On a national basis
the trend we saw from 1999 to 2000 was approximately 9.5 percent across major
employers. For 2000-2001, we are beginning to see some higher levels of
increase, so we are probably going to get something like 12 percent for HMOs and
be in the 11.5 percent to 12 percent range for other plans," Bruner said.
Small businesses will see even higher increases since they will have
fewer plans to choose from, Hewitt said.
"There is just less competition
than there was a number of years ago. A number of large players have disappeared
from the playing field and the ones left have realized that it is a seller's
market," Bruner said.
The double-digit hikes have frustrated buyers and
health care providers alike. Doctors fear that renewed efforts to curb costs
will mean less control and more battles over patient care.
"What it may
reduce is direct time between the patient and the physician," said Palmer Jones,
executive director of the N.H. Medical Society, which was told its own own
health care premiums would rise by as much as 20 percent.
"When you have
two companies controlling 90 percent of the patients, it is hard for the
provider community and physicians to have any kind of bargaining power or say
yes or no. They just have to do what they tell them," Jones said of physicians.
Hospitals, too, fear that they will suffer as a result of rapidly
escalating prices. "We are incredibly concerned about access," said Mike Hill,
director of the N.H. Hospital Association.
"You would like to be able to
blame somebody and go get them, and it is really hard to do that," Hill said. "I
think we are still playing some catch-up from a number of years of cutthroat
competition from a number of insurance plans that undercharged and were having
huge losses year after year. Now we have far fewer plans. The cutthroat
situation is gone and we are seeing a lot of catch-up. What plans are charging
may be perfectly reasonble but it is a big jump from where we might have been."
Nationally, experts estimate that with every 1 percent increase in the
price of health insurance, 300,000 people will lose coverage. When they do,
local hospitals become the safety net.
"Medicaid only takes care of
about 40 percent of the poor," Hill said. "A lot of other people who are not
qualified for Medicaid get expensive care in hospitals, but of course they are
subsidized with other people's money."
Much of that money comes from
major insurers like Cigna and Anthem who pressure providers to accept lower
rates in order to keep premiums down. That can leave hospitals with less money
to treat growing numbers of people who can no longer afford to buy health
insurance, Hill said.
"A few years ago all hospitals were operating in
the black, but now one-third are in the red, and they are not all tiny
hospitals," Hill said.
Katharine Eneguess, the vice president who
oversees health care matters for the Business and Industry Association of New
Hampshire, said many employers have called asking why rates are going up again
and asking what can be done about it. For the first time in some years, members
are beginning to talk about a national single-payer insurance system, Eneguess
said.
"One of the things I hear a lot when I speak to small businesses
is that it is very difficult to keep up but at the same time, it is very
difficult to lose an employee over not having insurance in this tight labor
market," Eneguess said. "Most employers are saying that they are doing their
best to try to absorb these costs."
Employers are trying new ways to
control costs, however. Eneguess said she knows of three groups of employers who
are trying to form a purchasing alliance, which would allow them to bypass
insurers and negotiate directly with doctors and hospitals for the care of their
employees. She expects at least one of them to succeed by early next year.
Large employers are also going to the Internet in hopes of finding
cheaper coverage for workers. Hewitt Associates has now conducted two internet
auctions that allow participating insurers to bid for the business of large
employers.
"We really believe e-commerce and the Internet are going to
play an extremely powerful role, first in allowing employers to find the right
plans to offer and then in allowing their people to find the plan that is best
for them," Bruner said.
LOAD-DATE: November 7, 2000
