If things were perfect
...
your health insurance rates would never go up.
While we would all like to see our health insurance rates
come down instead of go up, it's not a perfect world. There are significant
reasons for the recent sharp increases in health insurance rates across
the nation.
Why have insurance rates risen so fast?
The major reason is skyrocketing medical costs and the
resulting increased size of health insurance claims submitted to insurance
companies by insureds.
Six primary factors have added significantly to the high
cost of medical care:
Medical inflation. This is the major cause of
the growing cost of medical care. The medical inflation rate is nearly
three times the rate of general inflation.1
Cost shifting. Federal programs like Medicare
have limited the benefits they pay as a way to help cut the federal
deficit. This has forced health care providers to shift more of their
expenses to the private sector.
Increasing use of medical services. Medical services
are being used more. Specifically, there has been an increase in the
use of certain medical services such as outpatient hospital care and
mental and nervous treatment. In addition, we favor action over patience.
The don't-just-sit-there-do-something mindset is present in a fair
number of health-care decisions. Patients today are biased toward
demanding treatment and letting insurance pay.
Technology. There's widespread agreement that
technology is the largest engine of health-care inflation. We spend
vastly more money on health care simply because we have vastly more
things to spend it on. National health spending was $1.3 trillion
in 2000.2 And the costs keep rising; health spending is projected
at $2.1 trillion by 2007.3 Hospitals modernize with new expensive
medical equipment and treatment in the hope of retaining patients
and facilities ... the heightened technology encourages hospitals
and doctors to experiment more ... subsequently, costs go up.
Increased catastrophic claims. With advanced
technology and a population that is living longer, it is not unusual
to see individual health insurance claims of $100,000 or more. We
are now able to treat illnesses that were untreatable in the past.
But often, these treatments are very costly.
Malpractice and overtreatment. Malpractice suits
against doctors and hospitals are occurring more frequently. Settlements
are larger. The result is expensive malpractice insurance for doctors.
Plus, doctors are now forced to practice "defensive" medicine,
ordering more tests than might be necessary, to protect themselves
from malpractice lawsuits.
What can you do to keep your insurance rates down?
There are ways you can fight the health insurance cost
crunch.
Up your deductible. Boosting your $100 deductible
on a typical health insurance plan to $500 can possibly cut your premiums.
In theory, the money you will save on premiums will cover your higher
deductible.
Take only what you need. Why pay for bells and
whistles you don't need? If you're not planning to have children soon,
you probably don't need maternity coverage, the most common (and perhaps
most expensive) optional benefit. If you're younger and healthy, you
may not need a plan that has lots of options but will cost you dearly
in premiums.
Remember the tax benefits. If you're self-employed,
you can deduct your insurance premiums from your taxable income, whether
or not you itemize. (If you're not self-employed, you must itemize
to deduct.)
If you currently have good health insurance, appreciate
it.
There are an estimated 43 million Americans who have
no health insurance at all.4 And because of poor health, a good share
of those people can't purchase coverage at any price. Others who have
insurance may suddenly find themselves without it if their employer
discontinues health care coverage or goes out of business.
What is MSBA doing to protect your interests?
MSBA negotiates benefits and rates on your behalf. Although
MSBA cannot control the rising costs of medical care and thus totally
eliminate rate increases for your MSBA-sponsored health care coverage,
through active intervention, the MSBA insurance committee works to keep
the inevitable rate increases for your coverage to a minimum.
When improvements are needed in your coverage, MSBA takes
an active posture to negotiate those improvements. The MSBA Insurance
Committee is currently researching the marketplace to ensure that the
sponsored Life and Health Program has the most competitive rates and
the most comprehensive benefits available to the membership.
For more information, please call toll-free 1-800-501-5776.
1Heaster, Jerry. "Don't throw dirt on inflation."
Kansas City Star, 01/19/02.
2OOMO, Life @ 50 Plus and Seniors USA. <http://senrs.com/health_care_cost_surged_in_2000.htm>.
Viewed 03/12/02.
3The National Coalition on Health Care. <www.nchc.org>. Viewed
03/12/02.
4"Nine Million Americans Will Lose Health Coverage Under Senate
'Patients' Rights' Bill." Committee on Education and the Workforce,
07/12/01.
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Last Updated 9/28/03 -
