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Thousands of Oregonians and struggling small businesses will see double-digit increases in the cost of their health insurance over the next year, forcing many to reduce benefits or drop insurance altogether.
The insurance companies also will require their customers to pick up the tab for a 1 percent state tax on premiums to cover uninsured Oregon children
The latest round of skyrocketing health insurance rate increases, from 10 percent to 23 percent, reflect the fundamental reason Congress is embroiled in a turbulent national debate over how to fix the nation's health care system.
Oregon's tough economy and high unemployment has pushed more people to drop insurance, driving up costs for those remaining in insurance pools. Some insurers estimate that the number of uninsured has climbed over the last year to about 750,000 to 800,000 in a state of 3.7 million people.
Small business health premiums have more than doubled over the last nine years, cutting profits, wages and jobs said Bill Kramer, a Portland health care management consultant who does work for the Small Business Majority, a national research organization.
Recent rate increases "will be crippling to many small businesses and many sole proprietors as well as other individuals," he said
Christine Chin Ryan, president of Synergy Consulting, Inc., a Portland energy efficiency software company, learned two weeks ago that Providence Health Plans is raising the company's premium rates by 33 percent to $664 per employee a month. One reason for the big jump is that her employees are older, with an average age of 57. She also offers a family plan, but none of her five employees takes it. If one did, it would cost her $22,283 a year.
Chin Ryan, who also chairs the Oregon Small Business Healthcare Initiative, said she may have to move to a health care plan with fewer benefits and bigger deductibles in the face of such big increases.
"We are subsidizing (insurers') profits and bonuses," she said. "It really is ridiculous .. You will have more small businesses drop it because it is so expensive."
Insurers file their annual rate increases on premiums for individuals and businesses with 50 or fewer workers with the Oregon Insurance Division, which must approve the rate hikes. The state doesn't track or regulate insurance rates for large businesses, but many insurers said those too are outpacing inflation and hitting double digits.
On top of the rate increases, most insurers say they will pass on to consumers the state's new 1 percent tax on premiums. The tax will be used to cover virtually all uninsured Oregon children.
The state insurance division in recent weeks has granted rate increases ranging from 10 percent for the Kaiser Foundation Health Plan of the Northwest to 16 percent for Regence BlueCross BlueShield of Oregon and 23 percent for Health Net Health Plans of Oregon. Those are average rates. Actual rate increases vary widely according to people's ages, health, deductions and benefits.
Sean Moriarty, operating manager of the Portland construction sales company CESSCO Inc., says every time health insurance rises 10 percent, it costs his company the equivalent of an entry-level job. He now pays $350 to $390 a month for each of his 27 employees for health insurance, and $1,040 to $1,170 for each family plan.
He said the company has reduced benefits in its health plan to contain costs. Otherwise it would be paying 42 percent more now than it did a year ago, he said.
"A lot of companies are at the breaking point," he said. "I'm dreading the day I have to go out and say to employees, 'I'm sorry. We can no longer afford this.'"
Insurers say they have no choice but to raise rates to cover the increasing cost and frequency of health care claims. As more people give up insurance, insurers must spread their costs over fewer people.
"That is one reason why we need health reform so badly," said Jack Friedman, chief executive officer for Providence Health Plans. "We need to get everyone under the tent (of the insured) because the costs for those who remain is getting pretty tough."
The heavy use of medical machines and technology, expensive drugs and a surge in obesity also contribute to rising insurance rates, said Sue Hennessy, a vice president for Kaiser Permanente Northwest.
"Essentially, we're older, sicker and we spend less on prevention and more on taking care of the more complex patients," she said.
Insurers say they are passing the 1 percent tax on to consumers as a cost of doing business, a cost that they can't just absorb.
"Absorb it out of what?" asked Kerry Barnett, executive vice president of corporate services for the Northwest operations of Regence BlueCross BlueShield. "We operate on very, very thin margins."
Regence, a non-profit company, has in the first seven months of this year earned a net profit of one-tenth of 1 percent, Barnett said.
Some insurers are including the 1 percent increase to cover the tax in their rate requests, but others are simply adding it to premiums beginning Oct. 1.
Consumers have always paid the cost of uninsured children because the cost of providing free care for them in emergency rooms has been added to commercial premiums, said Cathy Kaufmann, manager of the state's Office of Healthy Kids.
"It is much smarter and cost effective to do it" through the tax, she said.
The state calculates that the tax adopted this spring by the Legislature will generate over the next two years about $105 million, which will bring another $240 million in federal matching money. The money will be used to cover about 80,000 children by June 2011.
The state also is taxing the net revenue of the state's largest hospitals at a floating rate not to exceed 5.5 percent. That money will be used to provide insurance through the Oregon Health Plan for about 35,000 more low-income adults. It will be paid back to the hospitals in the form of increased Medicaid payments for their services.
Alyssa Gasca, 35, of Portland, said she doesn't mind paying the 1 percent tax to cover children, but she's frustrated over soaring health care costs. She left a corporate job with good benefits to work independently as an organizational development consultant.
She now pays $350 a month for insurance with a high deductible for her and her 4-year-old daughter Lucia. The cost of health care is one reason more people don't venture out on their own, she said.
"I still have sticker shock every year over how much I pay to run a business," she said.
Larry Weiner, 54, a Portland litigation consultant, said he too is frustrated by insurance rate increases that dwarf the tax for children.
"I don't know how much I really care about (the 1 percent tax) given that I routinely get a 20 percent increase" in health insurance rates each year, he said.
Weiner said one year, when he moved to an older age bracket, his insurance rate jumped 75 percent. He has increased his deductible, but still pays $435 a month to insure himself. He said he wonders if people who are satisfied with their health coverage realize that "something is going to give" at some point.
"They may think things are fine now," he said, "but there could be a freight train coming unless something is done to rein in the cost of health insurance."
-- Bill Graves
This why we need a stable option to private insurance this is happening all over the country
-------------------- Wise men learn more from fools than fools from the wise. Posts: 3827 | From: beautiful California | Registered: Sep 2008
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