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Single mother Theresa Haight, center, shown with her son, Matt, 18 and daughter Jenni, 16, was worried she wouldn't be able to afford health insurance when her employer's insurer wanted to raise rates 50 percent. The boost ended up being a more manageable 33 percent. Health Care: Is it worth the price? Health care costs are mounting for Rogue Valley businessess and workers, with no relief in sight The e-mail message that skipped across the employees' screens made their jaws drop and their stomachs twist. The message was from their boss, Dewey Wilson, president of International Commodity Carriers Inc. It warned them that their health insurance rates could go up 50 percent if the company didn't find a better deal soon. At another mid-size company, Ram Offset Lithographers in White City, employees already are paying 40 percent more in 1999 than they were in 1998 for health insurance. Employee Mike Zilinsky could not afford health insurance coverage for his wife and twin boys because of the increase. But he is in luck. The company's owners plan to switch to another, more affordable health plan in February. Rogue Valley businesses and their employees continue to wrestle with the skyrocketing cost of health insurance. Employers say if costs rise in the double digits every year, they will have to pass the increases on to customers, cut medical benefits or shift more of the cost onto employees. Meanwhile, insurance agents and health-care professionals say a variety of complex forces, including new drugs and new technology, are driving up the cost of health care. Instead of paying 50 percent more for health insurance in 1999, the dispatchers and salespeople at ICCI, a Medford truck brokerage firm, will pay 33 percent more. They also lost vision benefits when they renewed with the same health plan they had in 1998. Last year, ICCI employees were covered by Klamath Medical Service Bureau. But KMSB merged with Regence Blue Cross Blue Shield in December. "As a family, I'm paying something like $108 more a month, which is a pretty good slice out of the pie," said ICCI vice president of sales Alan Decker, a 40-year-old father supporting a wife and four boys. ICCI pays for his health insurance and approximately 50 percent of his family's cost. He now spends $294 a month for health insurance. Mike Zilinsky of Ram Offset Lithographers in White City said his employer's decision to go with another insurer allowed him to continue paying premiums when he was faced with a 40 percent increase under the old plan. ICCI truck dispatcher Theresa Haight, a 41-year-old single mother with two teenagers, was dreading the 50 percent increase the company president had first announced in his e-mail message. "My heart sunk and I just about died," she said. She would have had to scrape more from her already meager budget to help her ex-husband pay for the monthly health insurance premium. The good news for her is that the rate increase is only 33 percent, and the office visit co-payment -- her out-of-pocket fee -- stayed at $15. What employers and employees alike wonder is how can health insurance rates can climb so high in one year. "Everyone expects increased costs," said Wilson, ICCI's president, "but 30 to 40 percent is just a budget buster." Several issues are driving these costs, and they are all complex, say health insurance officials, agents and other health-care experts. Everyone in the industry agrees that astronomical pharmaceutical costs are the biggest driver of rate increases. Not only are there more new drugs, but more consumers are requesting them because of direct advertising by pharmaceutical companies. Patients also are using more drugs on the whole. More use means higher costs, say insurance officials. Rates also go up when health insurance plans charge less than their costs. That is partly the reason for the spikes in rates for Ram Offset, which had Providence Health Plans, and ICCI, which had Regence BCBS/KMSB. John Van Dyke, vice president of communications for Regence BCBS, said KMSB's rates would have increased with or without 1998's merger with BCBS, because it was charging less than it needed to cover its claims. "You can only dip in the reserves a certain amount of times before those reserves start looking bad. The only other place to get money is the ratepayers," Van Dyke said. Ed Singler, sales manager for Providence Health Plans in Southern Oregon, said Providence has sometimes had to charge rates that were lower than costs to compete in the market. Another factor for Providence was its purchase of SelectCare last year, a health insurance plan out of Eugene. SelectCare didn't perform well, especially with small groups in Douglas County, so Providence has had to spread that loss across the rest of its members. Van Dyke and Singler also emphasize that even with the higher rates, the nonprofit insurance companies are barely breaking even. They are not alone, as many HMOs reported losses last year. Other forces pushing health care costs up, and in turn health insurance rates, include new technology, federal and state laws requiring insurance companies to provide specific benefits for certain size employers, and people using their health plans more often. Some also point to the rising costs of doctors and hospitals. Locally, however, the largest doctor group, PrimeCare, has increased its rates by 3 percent a year for the past three years in its health plan contracts. Providence Medford Medical Center increased its rates this year by 10.8 percent. Mike Strasser, Providence chief financial officer, said hospitals usually account for about a third of the cost of a health plan. The reasons behind mounting health care costs are so many, so complex and so intertwined that even those in the industry don't agree on all of them and how they affect each other. But one thing is for certain, said Mike Bond, PrimeCare chief executive officer: "Everybody has got to do their part in controlling health care spending, which means seeking the services that are medically necessary. If people don't take some responsibility, health care costs will continue to go up at an irresponsible rate." Besides the rate increase, the biggest frustration for ICCI's Wilson was the brief time he had -- less than 30 days -- to shop around for another plan. "There are volumes to read to do comparative shopping," he said. Then there is the issue of which employees can keep their doctors under which plans. "It becomes a bit of a logistical nightmare," he said. After a month of shopping around, Ram Offset owner Alan Cornwell said switching to ODS saved the company $27,000 a year. He'll be able to offer employees similar benefits, and they won't have to change doctors. The most frustrating part of the health insurance game for him is the uncertainty of it all. "We as consumers don't have any idea as to who our doctors might be from one year to the next, not to mention the costs," Cornwell said. Bill Thorndike Jr., president of Medford Fabrication, shares that frustration. He has to budget and set prices for his welding products sometimes a year in advance. The company's prices can cover modest increases, but not 50 percent jumps, which is what the company faced upon renewing its health insurance with Regence Blue Cross Blue Shield/KMSB. He lucked out and found ODS, an HMO which offered him a rate increase of 9 percent for single employees and a 6 percent increase for families. Thorndike said he has a good grasp on most of the company's expenses, "but the cost of paying for health insurance is the biggest unknown that I have as a businessman." The 140-employee company is one of the few which pays the full cost of health insurance for employees and their families. But if insurance costs keep rising, Thorndike said, "at some point you have to go to the employee for help." Today's Business Index Mail Tribune Copyright � The Mail Tribune 1999, Medford, Oregon USA