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Health Insurance Costs Soar Out of Control

Health Insurance Cost

The cost of health insurance continues to rise and premiums far exceed the rate of wage increases and inflation in the United States. Health insurance premiums are going up ten times faster than people’s incomes and the average dollar amount employees must pay per year for family health coverage increased by 30% from 2001-2005.

Federal employees premiums will climb an additional 13% next year for enrollees in the Blue Cross and Blue Shield Plans. The Office of Personnel Management (OPM) negotiates on behalf of the nations largest group of employees, more than eight million federal health workers, retirees and dependents. Despite this bargaining clout, they were unable to keep cost increases at a reasonable rate. On average, enrollees with family coverage will pay about 30% of the plan’s total cost with the government picking up the remaining 70%.

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Blue Cross and Blue Shield, which covers the bulk of Federal employees, blames the cost increases on drug costs and the fact that few patients have switched to cheaper generic medications. In 2009, the government wide service benefit plan will waive the first four copays for members who use mail order generic drugs in an attempt to reward the switch. Members will continue to save 5% on copays for generic drugs they buy at pharmacies.

Other reasons cited for the soaring cost of insurance was “higher utilization of health care services, technology and medical inflation”, according to Jena Estes, vice president of federal employment programs for Blue Cross Blue Shield. Colleen Kelly, president of the National Treasury Employees Union, said, “It’s very discouraging to see average increases of this magnitude…particularly given the bargaining power OPM should be able to exercise as manager of the nations largest group plan.”

Nancy Kichack, OPM’s associate director for strategic human resources policy, reported that the increasing premium costs reflect the rising costs of health care, though she stressed that Federal premium increases are less than increases for most major health care programs in the private sector.

Since the government sector is covered by our taxes and the private sector is covered by our wages, the American people are paying either way. There is no relief for the American people when health costs spiral upward and the bargaining advantage of that insurance giant, “The Blues”, has far exceeded the power of the government to negotiate lower rates for its employees.



Missing from the article is how much profit Blue Cross may have made this past year. As a physician, when I read about health insurance going up due to inflation, I wonder who is getting the money because it certainly isn't me or many of my office based primary care colleagues. And the hospitals are similarly contractually constrained. And the drug cost argument makes me wonder since the insurers often make us do prior authorizations for the name brand medications (i.e. you must use a generic alternative first before they approve the name brand), and many generic alternatives have become available in the last 2 years (see Walmart's $4 drug list as an example). Yes I am also paying for the increase in cost yet in 4 ways: increased direct cost (I pay for my employee's insurance), taxes, reduced income, and most importantly not being able to assist patients due to poor insurance coverage.
I see they didn't mention that the health insurance executives well get big bonuses and pay raises........... Humm, do you think that might have something to do with the high costs. And you got to add in the payoffs to the government officials.......
Twenty years ago Harvard physicians proposed that the only rational and effective approach to the crisis would be by innovation that reduces utilization.In 1994 a book entitled,"A Medical Solution to the Healthcare Crisis" was published, and eventually distributed to about thirty physicians, many on staff at the Yale-New Haven hospital. The author explained that the ability of lithium and antidepressants to stimulate the immune system had profound implications for revolutionizing the prevention and treatment of infectious disorders and cancer. Not one of the physicians contacted the author, many holding faculty appointments at the Yale medical school. It transpires that antidepressants have amazing anticancer properties, a study in Belgrade showing that an antidepressant was able to arrest advanced lung cancer. The first article on this advance was published in 2001, but despite a sustained effort at dissemination was ignored by many medical schools, the lay and medical media, countless cancer foundations and organizations, many premier cancer and general medical journals, and many other vested interests, including the National Cancer Institute and the American Cancer Society. The immunostimulating properties of lithium and antidepressants were similarly suppressed, even by many major AIDS oganizations and media. These properties came to light in 1981, one year before AIDS emerged. Twenty two drug companies declined interest. Although advised of the advance, members of the Yale medical school faculty refused to develop it. Later, scores of medical schools in the U.S, U.K, Canada and South Africa similarly declined. A prominent medical resesarcher once noted,"When clinical progress occurs, research funds related to the problem dry up." Medical schools, hospitals and government health agencies in the US and many other countries are as much in need of reform and oversight as are our financial institutions. And we need to facilitate the exposure of ethical infractions within medical education and research. Anonymous
I agree with the above comments but I think the problem is far worse than the numbers show. Do not forget that every year the % increase is now way ahead of salary increases and those % increases on health care are compounding. I have also been watching the trend of the insurance companies that constantly pay far less than the actual cost of the service. In other words we are paying exponentially more for far less coverage. I am convinced that these insurance companies have whole departments dedicated to "payment avoidance" and there are likely bonuses paid to the lowest payouts. I have been working for 25 years and used to pay $0 for health care. Now I have about $5000 out of my pocket for family coverage and lack of insurance company payments. Fortunately none of us have any significant illness. I would hate to see how much our cost would be if we actually got sick!
It has worked wonders for keeping the cost of cars and electronics down. So if we start traveling north or south of the border for our medical procedures that will for sure keep the cost down here. We just have to find a way to rate different hospitals and or physicians in other countries.
To all anons: I agree completely about the exec bonuses, profits that are being made by denying care and the difficulty with prescribing generics. Many of the drugs we commonly use are not available in generic prescribing and the pharmaceutical prices are astronomical and are now being paid for by the consumer. For instance a common eyedrop is over $100/month. The best acne treatments are over $150/month. Treatment for certain GI infections are over $15/pill. These costs are being passed on to consumers and, as anon 6:13 writes, the hassles being placed on primary care physicians to get authorization are part of the "hassle factor" that drives physicians away from Primary Care. The "free market" is just not solving these problems in a way that patients, or business can benefit. The article points out that even the "government" (which is us) that has large bargaining clout is ineffective in negotiating with the "Big Blues" and their powerful lobby and consolidation.