Commentary: Steve Roberts

Businesses Need Affordable Options For Health Care

The Charleston Gazette, January 30, 2006

One of the most pressing issues facing West Virginia employers and employees is the growing problem associated with affordable health insurance coverage. No matter what side you may be on — business or labor — the issue is reaching a crisis stage. It is more important than ever that we work to find common ground.

For companies that provide insurance, more and more are faced with rising costs. Some are having to scale back coverage or make even more drastic changes. Companies that don’t provide coverage are being further shut out of offering affordable plans. And, for the growing ranks of uninsured people and those on public-sector health care, the outlook is looking bleaker.

Just as in other states, West Virginia’s business community, particularly its small businesses, is seeking a solution to this complex, important problem. The West Virginia Chamber of Commerce has outlined a number of proposals to help resolve this situation and pledges to work with Gov. Joe Manchin, legislators, insurance company officials, health-care providers, doctors and labor leaders to develop a workable solution.

To understand this issue more fully, the West Virginia Chamber and the West Virginia Hospital Association invited a leading health-care expert to speak last August. Stuart Altman, chairman of the National Council on Health Care Economics and Planning, told attendees that the nation’s health-care spending situation is a “scary picture.”

Speaking at a health-care symposium, Altman outlined key influences on health-care spending, which has risen to 15.4 percent of GDP — significantly higher than in other nations. Privately insured health-care premiums are going up at double-digit rates — three to four times the rate of inflation.

Among the key drivers are prescription drugs (changes in usage, prices and types prescribed), physician services and hospital costs. “We are spending more money because we are using more health-care services,” Altman said. Factors include more and more chronic conditions, more newly available elective procedures and an aging population. Higher health-care labor costs and more expensive medical technologies also are contributing to the growth in health-care spending. Altman said that the current situation is unsustainable. “Our employer-based [health-care insurance] system is cracking ... the system is deteriorating.”

Another major culprit is cost-shifting, which accounts for a very large percentage of private-sector health insurance premiums in West Virginia. Cost-shifting arises when hospitals and health-care providers do not receive reimbursement of their actual costs of serving the sick who are uninsured. These unpaid costs are then shifted to those who can pay — generally private-sector health-care plans.

Some estimates say cost-shifting in West Virginia has added 45 percent to the cost of private-sector insurance. This is unsustainable.

This cost-shifting burden in West Virginia makes it harder for employers who want to provide health-care coverage. National data show that the percentage of businesses offering health insurance to their workers has declined steadily over the last five years as cost continues to outpace inflation and wage growth. The most recent survey to show this is the 2005 Annual Employer Health Benefits Survey completed by the Kaiser Family Foundation and Health Research and Educational Trust.

The survey found that 60 percent of firms offered coverage to workers in 2005, down from 69 percent in 2000 and 66 percent in 2003. The drop comes almost entirely from small businesses, as nearly all businesses (98 percent) with 200 or more workers offer some benefits. The data also show that premiums continue to increase at rates well above the inflation rate. This rate of growth has been more than three times the growth in workers’ earnings. Overall, since 2000, premiums have gone up 73 percent.

According to the Kaiser study, the annual premiums for family coverage reached $10,880 in 2005, surpassing the gross earnings for a full-time minimum-wage worker ($10,712). The average worker paid $2,713 toward premiums for family coverage in 2005, or 26 percent of the total health premium. While workers’ share of their premiums has been relatively stable over the past few years, they are now paying on average $1,094 more in premiums for family coverage than they did in 2000.

Two other highlights from this 2005 survey:

1. Reasons for not offering coverage: Firms that do not offer health benefits — most of them small firms — were most likely to cite cost as a key factor, with nearly three in four saying high premiums were “very important” to their decision. In comparison, just over half cited their firm’s small size and one in three said their workers’ access to other coverage was important to their decisions.

2. Confidence in cost-containment strategies: Few employers have much confidence in strategies to contain rising health-care costs. For example, 16 percent of employers say consumer-driven health plans are “very” effective at controlling costs, while another 45 percent say they are “somewhat” effective. Nearly as many view higher employer cost-sharing as effective, and view disease management as very or somewhat effective. Fewer see tighter managed-care networks as effective.

Workers and businesses alike are finding it harder to afford health coverage.

The West Virginia Chamber of Commerce advocates developing responsible state initiatives to expand affordable health insurance coverage options for businesses. Gov. Manchin is proposing some of these, including added ways for more businesses to offer at least a basic coverage policy. The West Virginia Chamber also encourages large employers to provide a meaningful health-care plan for their employees.

Our chamber also supports responsible measures to increase state funding for governmental health-care programs to pay for health care and to prevent further cost shift to the private sector.

All participants need to help develop innovative solutions to this huge problem. Among these may be a combination of options focused on preventative and diagnostic care, workplace wellness and chronic disease management. In addition, some mandated coverage should be re-evaluated to help reduce costs. The chamber also continues to support legislation to create association health plans to make health care more affordable and accessible for employers.

Steve Roberts is president of the West Virginia Chamber of Commerce.