Med-Pay CEO says little relief in sight for health-care costs

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Rising costs for medical care and the insurance needed to cover those costs are at issue within all sectors of American business.|ret||ret||tab|

Gordon Kinne, chief executive officer of Med-Pay, said he sees no immediate relief ahead, identifying medical technology as the primary factor in cost increases. |ret||ret||tab|

"Technology and medical advances are enabling all of us to live longer, healthier lives and to bring more healthy newborns into our population. These are good things, but there's a cost here," Kinne said.|ret||ret||tab|

A secondary factor, he said, is the upsurge in managed health care, particularly HMO plans. |ret||ret||tab|

"These plans allow, for example, office visits at perhaps a $10 cost to the patient or subscriber. Consequently, you have more individuals going to the doctor or hospital more frequently than ever before, and there is more health care being rendered by the providers."|ret||ret||tab|

Providers had to make sure they were staffed well enough to handle the volume of patients generated by the HMO benefits structure.|ret||ret||tab|

"All of a sudden, everybody had to beef up services, and the normal supply and demand factors don't work in the medical field," Kinne said.|ret||ret||tab|

In order to combat rising costs to employers, copay amounts are being increased, say, from $10 to $20, and deductibles are being increased, Kinne said. |ret||ret||tab|

Also, employers are investigating a variety of plan options to ascertain which best serves their work populations.|ret||ret||tab|

Kinne said he is seeing coverage gravitating away from the straight HMO concept toward a point-of-service approach.|ret||ret||tab|

"The medical community here was hit hard over a four- to five-year period," Kinne said, "leapfrogging from the indemnity-type of medical coverage on through the PPO to the HMO, which offers discounts and incentives for subscribers to utilize only those providers specified under the plan."|ret||ret||tab|

Point-of-service coverage differs from the HMO in that benefits are based on a schedule which pays according to where the medical services are rendered, Kinne said.|ret||ret||tab|

Self-funded plans still are popular, Kinne said, because they give the employer the advantage of direct involvement and the ability to see where the costs are. However, under this type of plan, the employer not the insurance company takes the financial risk.|ret||ret||tab|

Self-funded plans require the right makeup, he said the correct coverage mix, an employer that is actively involved and the ability to obtain reinsurance. |ret||ret||tab|

Kinne added that since the advent of managed care, obtaining reinsurance has become more difficult for smaller employers. |ret||ret||tab|

"When ... the HMO rush came three or four years ago, a lot of the insurance organizations got out of the reinsurance/stop-loss business," he said.|ret||ret||tab|

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