Employers and insurers scramble to control costs

Question: What guarantee can you expect from your health insurance plan?

Answer: The rates have or will go up this year!

From the small to the large employer, insurance rates that provide basic health benefits are on the rise. Double-digit medical inflation has caught the attention of nearly every employer providing health insurance to its employees. The increased cost has forced health insurance companies to make adjustments to the plans they offer to stay viable.

Costs are rising because of the convergence of several factors. Among the most notable causes are state and federal mandates, rising costs in pharmaceuticals, over-utilization and cost shifting from Medicare and Medicaid to private insurors.

The full impact of complying with the Health Insurance Portability and Ac-countability Act is not realized. Under this landmark legislation, insurors are prohibited from denying to issue a group health plan to employers with 2 to 50 employees. Further, small group reform laws in Missouri cap the amount an insuror can charge to insure a group. In other words, insurance companies may many times find themselves forced to take a group with many undesirable risks without the ability to price the program appropriately to make a profit.

The cost of prescription drugs has increased at astronomical rates. Most pharmaceutical companies cite research and development costs as the reason; however, some observers state it is due to costs associated with national ad campaigns designed to entice consumers to "ask their doctor" about their particular treatment or drug.

Some blame it on plain old greed and the loss of monopolies on certain brand name medications. Utilization is on the rise, which fuels more claims. New technologies and defensive medicine practiced by physicians adds to the cost. Medicare and Medicaid force providers to accept reimbursements that are less than the actual costs of providing services. Physicians normally do not absorb these shortfalls, so they are passed on to those with private insurance to make up the difference.

(Darrren Coffman is president of Benefits Unlimited Inc.)