Health Consensus California

Consensus Commentaries
Consumer Stories
Press Releases
Our Common Problems
Employer Health Survey Results
Get Involved


News Coverage


Paying a Premium for Healthcare

Dec 17, 2002

SAN FRANCISCO -- Health insurance used to be one of the perks of holding down a fulltime job. Not anymore. Healthcare premiums are getting so expensive, more and more companies are passing the cost on to workers.

As for the self-insured, many are being priced out of the market.

Don Lapin is self-insured through Blue Shield paying a premium of $250 a month. Five years ago, he was only paying $70. Despite the cost, every rate hike comes with cuts in benefits.

"My deductible increased from $1,000 to $1,500, and co-payments increased from 10% to 30% to 40%," Don says. "Plus, I have a $250 deductible for brand name drugs."

According to a recent survey by Milliman USA, a business consulting company, premiums for individual insurance policies rose 30% this past year alone, and are expected to go up another 30% next year.

At the same time, employers are making their workers shoulder a bigger of health coverage. Out of pocket costs for insured employees increased 27% last year and are expected to increase another 25% in 2003.

Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights says rising premiums have nothing to do with most HMOs bottom line. "New data that was released last week by the state Department of Managed Care shows that, in fact, 5 of the state's largest HMOs are sitting on $2.2 billion in reserves."

Healthcare providers say the reserves are necessary to protect members in case of bankruptcy. In just the past two years, 6 plans have gone under, making the need for larger reserves all the more important.

Meanwhile, consumer advocates plan to lobby lawmakers to require HMO's to get prior approval before raising rates. "That approval investigates the financial holdings of an insurance company and determines whether those rate increases are actually necessary."

Meanwhile, consumers should shop around by using annual report cards put out by the State of California HMOs.

Raising your deductible could also lower premiums. But it's not always easy; Don Lapin found out when he tried. "They said I was in a tier two category rather than a tier one, which meant I was ineligible. I would have had to have a squeaky clean record to obtain the $140 premium."