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Sick about health insurance Mail Tribune / Bob Pennell Tiffany Cameron, 8, of Medford gets some attention from her grandmother Marsha Cameron in the waiting room of Valley Immediate Care in Medford. When they get their medical insurance bills these days, a lot of Rogue Valley workers and employers probably long for a little TLC, too. Employers, workers struggle with rising costs; nobody sees a simple solution By BILL KETTLER Thousands of Southern Oregon residents are paying more for health insurance these days � and getting less. Insurance companies have dropped HMO plans that offered generous benefits. Employers are asking workers to pay a bigger share of rising insurance premiums. Benefit plans often require workers to pay a larger portion of the charges for lab work, X-rays and surgery. Employers find themselves struggling to provide insurance for workers without emptying their checkbooks. Some choose insurance that gives employees fewer benefits or requires them to pay a little more each time they see a doctor. Others give their employees cash to buy their own insurance. Some jump from one insurance company to another, signing on with whoever offers the lowest rates. Most cringe when renewal time comes around, waiting to see how much more they�ll have to pay. L & S Trucking of Central Point swallowed a 47 percent increase to insure its 30 employees last year. "We�ve been paying the price, but I don�t know how long we can keep doing this," says Bob Corliss, operations manager for L & S Trucking. "We can only absorb so much. We can�t go out and tell a customer we�re going to increase their rates 47 percent. There are too many trucking companies out there." Rate increases of that magnitude have prompted many employers to shop for a new insurance carrier whenever renewal time rolls around. Medford�s Neilson Research Corp. has signed agreements with four insurance carriers in as many years. "The employees hate it," says Kim Ramsay, human resources officer at Neilson, "and I hate it as an employer. As soon as we figure out one insurance plan, we have to learn a new one." For their part, insurance companies say they must pass on their rising costs to stay in business. New medical technology and prescription drugs make health care more expensive, even as it becomes more effective. People in Southern Oregon see their doctors more frequently, too, which drives costs higher, says Ruth Rogers Bauman, vice president for actuarial services for the Regence Group, parent company for Regence BlueCross BlueShield of Oregon. "Consumers want full levels of service without full knowledge of what it costs," Bauman says. "We see the same pattern with nearly everything from earaches to back surgery." Bauman and others in the insurance business say Southern Oregon�s high "utilization rate" (the number of doctor visits and surgeries) made health maintenance organizations unprofitable here. HMOs, with their "managed care" approach, were supposed to keep patients healthy and hold costs down when they were introduced in the early 1990s. Insurance companies say they dropped HMOs because they could not charge enough to make them profitable. "Managed care actually brought inflation instead of cost control in Medford," Bauman says. "Medford is one of the few cities that has two hospitals, but competition hasn�t led to any reductions in price." Hundreds of employers had to find new insurance plans after Providence Health Plans and Regence withdrew their HMO programs from Southern Oregon last summer. Some turned to "self insurance" to keep costs down. Companies that self-insure create their own risk pool. The money workers pay in premiums becomes the reserve they use to pay for doctor visits, surgeries and trips to the emergency room. They pay a third party to administer the plan. The Oregon Shakespeare Festival�s 245 employees and their dependents became self-insured Jan. 1, rather than pay 45 to 70 percent more for traditional insurance. "Some companies just declined to bid," says Jerry Roos, the Ashland festival�s finance director. "They knew they wouldn�t be competitive." Even with self-insurance, festival employees pay more for doctor visits ($15, compared to $10 under their previous plan). Costs for prescription drugs rose, too, and the festival had to buy re-insurance to protect itself against a catastrophic expense (such as organ transplant surgery) that could cost more than the $500,000 employees pay in premiums. "When all was said and done, we were able to structure a program with a 25 percent rate increase overall," says Roos. "We had budgeted for a 20 percent increase, so we felt pretty good about that." Many employers have turned to "preferred provider organizations," or PPOs. In a PPO, insurance companies sign a contract with a group of doctors (their "preferred providers") to treat a given number of patients for a given rate. "It�s simply a volume discount," says Bauman, the insurance actuary. "It�s no different from buying all your newsprint from one source." PPOs typically require a co-payment for each doctor visit, and patients pay a "deductible" amount (usually $200 to $500) before their insurance kicks in. They also pay a share of the cost for each medical procedure, such as lab work and X-rays. PPOs generally cost patients more than HMOs, but patients can visit any physician without getting a referral from a primary care doctor. PPOs resemble the traditional insurance plans that were popular before HMOs, says Christin Sherbourne, an insurance consultant for Marsh Advantage America. "It�s a �70s-style plan," says Sherbourne, who helps local businesses develop their insurance plans. "The insurance picks up after (a patient pays) the deductible." The PPO approach gives people an opportunity to manage their own care, says Tammy Sona, personnel director for Southern Oregon Linen Service. "Employees have a sense of empowerment," Sona says. "They know they can go anywhere they want. They don�t need a referral to see any doctor they want." Southern Oregon Linen chose a PPO program for its 50 employees after the HMO offerings dried up. But PPOs don�t necessarily reduce insurance costs. Southern Oregon Linen employees pay $15 for doctor visits and a $250 deductible before the insurance kicks in, but even with those cost-cutting measures, premiums cost more than many employees can afford. "A lot of our employees earn minimum wage," Sona says. "The monthly premium for an employee, spouse and children costs $701.25. We pay $526. How is a person making minimum wage going to pay $175 for family coverage? And that doesn�t even include a dental program." Some employers have created insurance programs that treat health insurance more like compensation than a benefit. Community Works, a social service agency, gives full-time employees a "benefit allowance" that amounts to about $20 per month more than the premiums for health and dental insurance for a single person. Eligible employees who have health insurance coverage through a spouse can use the allowance to buy other benefits, such as disability insurance or dental insurance for family members. They may also put the money into a deferred compensation account for child care or unanticipated medical expenses. Or they can have the benefit allowance paid to them as taxable wages. The benefit allowance replaces a complicated formula that Community Works used to provide insurance for employees, says human resources manager Deborah Tipton. "The old formula didn�t seem to be evenly figured," Tipton says. "Some people got a better break than others. This is more equitable." Under Community Works� preferred provider plan, employees pay $10 for each doctor visit and no deductible. But the plan costs about 24 percent more than the agency�s previous insurance. "We�re anticipating another big increase this year," Tipton says. "Insurance is the one part of my job that�s very discouraging. Rates keep climbing and it doesn�t seem to make any difference what kind of insurance it is." Insurance professionals say the system as it has evolved bears some responsibility for spiraling costs. "We created our own monster," says Jeff Brown, a Regence sales executive. "We�ve created insurance programs so that nobody knows what things cost." Brown sees no easy solution in his crystal ball. "There�s going to have to be some compromise between benefits, service, quality and access to care," he says. "It�s a real social issue. There�s no simple answer." Reach reporter Bill Kettler at 776-4492, or e-mail [email protected] Options for employers Employers have adopted several approaches to find the best insurance deal for their workers: - Many companies that formerly had HMO-style insurance now have a "preferred provider" plan, or PPO (for preferred provider organization). PPOs differ from HMOs in several significant ways. A PPO member no longer has a "primary care physician," or PCP. Patients can visit any doctor they want, but they get the most benefits when they see doctors who are in the preferred provider panel. PPOs require each patient to pay a fee for each doctor visit (co-pay) as well as a "deductible" amount before the insurance kicks in. After the deductible is paid, the insurance pays a percentage of the charges (say, 80 percent) and the patient pays the other 20 percent. Here�s an example: Jane Doe has a PPO with a $15 co-pay, a $200 deductible, and an 80/20 split. She pays $15 each time she visits the doctor. On July 1, she has lab work that costs $150. She must pay $15 for the doctor visit and $150 toward the deductible. On July 8 she visits the doctor again and has tests that cost $200. She pays $15 for the doctor visit, and $50 to meet the $200 deductible. Of the remaining $150, the insurance company pays 80 percent and she pays 20 percent. - Some companies have chosen to self-insure their workers. In self-insurance, the company becomes the insurer, although most self-insured employers hire a "third party" administrator to manage the program. Self-insured organizations generally need a premium budget of about $500,000 to see any cost savings. They buy "stop-loss" insurance to protect themselves against unforeseen expenses such as organ-transplant surgery. Self insurance allows employers to design plans to suit employees� needs, rather than take whatever package the insurance company offers. If the employees stay healthy, it�s easier to adjust insurance rates downward. Self-insurance benefits typically includes co-pays and deductibles like PPOs. - A few companies have created benefit allowance programs. Employees have a set amount to spend on health insurance or other benefits. People must generally buy health insurance unless they have coverage through a spouse. But if they are covered, they can use the benefit allowance for such services as the employer may provide (typically disability insurance or special accounts for unexpected medical expenses). Employees who have insurance coverage through a spouse could choose to have the benefit allowance paid to them as taxable wages. Major health insurance providers in Southern Oregon HMOs may be history in Southern Oregon, but at least 10 major providers offer health insurance through a number of local offices: - Aetna US Healthcare 503-937-0704 www.aetnaushc.com/ - Cigna (for employee groups of at least 50) 800-832-3211 www.cigna.com/ - Great West Life 800-537-2033 www.gwla.com/ - HealthNet 800-388-8335 www.healthnetoregon.com - LifeWise 800-777-1502 www.lifewisehealth.com - Mutual of Omaha (for employee groups of at least 75) 503-244-3926 www.mutualofomaha.com/ - ODS Health Plans 800-578-1402 www.odshealthplans.com/ - PacificSource 800-624-6052 www.pacific-source.com/ - Regence BlueCross BlueShield 734-8968 www.bcbso.com/ - UniCare (for employee groups of at least 100) 877-864-2273 unicare.com/ Mail Tribune Home | Ottaway Newspapers, Inc. | Dow Jones & Co., Inc. | Privacy | Contact Us Copyright � 2001 Mail Tribune, Inc.