Business owner Mary O'Brien wasn't surprised Wednesday to learn that a national survey showed that Nebraska had the biggest percentage increase in employer health care costs this year.
Her marketing business, OBI Creative, faces an increase in premiums of more than 15 percent for 2010. And O'Brien, who represents small businesses as a director of the Greater Omaha Chamber of Commerce, said health care legislation moving ahead in Congress apparently will do little to control those costs.
“It's kind of out of control,” said O'Brien, whose company has 10 employees. “It makes you question, as a business owner, how much more can we take?
“Do I want to move into a world where there's socialized medicine? No, I don't. But if this keeps happening, maybe something like that is needed. It's crossed my mind.”
Mercer Group of Kansas City, Mo., released the results of its annual survey the day before the U.S. Senate is to begin debating the most sweeping change in health care laws in 40 years.
“I have no reason to be optimistic that there's going to be anything in those bills that will control costs,” said Pat Bourne, vice president for commercial business and public affairs for Blue Cross Blue Shield of Nebraska.
He said the Mercer survey's results are similar to Blue Cross' estimates of medical cost increases in Nebraska — about 11 percent this year and slightly less in 2010. Medical costs are responsible for 90 percent of the premiums paid to the Omaha-based nonprofit insurer, he said.
The higher costs come from more frequent patient use of medical treatments, rising medical fees and more expensive medical technology and medication, Bourne said.
“It's just a reflection of medical trends.”
Blue Cross covers about 40 percent of Nebraskans, or about 600,000 people. Right now, many businesses are renewing their health benefits for 2010. Bourne said few of his company's business clients have dropped coverage because of rising costs, but many are reducing benefits to mitigate the increases.
Blue Cross is trying to help control costs by offering wellness and disease management programs that both clients and nonclients can use, Bourne said.
Glenn Fosdick, past chairman of the Nebraska Hospital Association and CEO of the Nebraska Medical Center, said hospitals and doctors should work to control costs, but individuals and employers must help, too.
Employers can push wellness programs and preventive medicine, and employees can exercise, follow a proper diet, end harmful behavior such as smoking, have regular checkups and follow treatment plans, Fosdick said.
The pending overhaul doesn't put a priority on any of those things, but rather emphasizes reduced payments to doctors and hospitals, he said.
“Getting people to wear seat belts and drive safely is going to be much more effective in reducing health care costs than paying ER doctors 5 percent less,” Fosdick said. “The fundamental thing is that there are many medical problems that can be treated with much more success and at less cost if you identify them early.”
But Congress apparently is unwilling to tackle politically difficult issues that could reduce costs, he said, such as banning smoking, curbing malpractice lawsuits and promoting end-of-life planning.
Even with those steps, the aging population will drive up health care costs, and successful treatment of many cases results in higher costs, Fosdick said.
“We need to find ways to make it less expensive, I don't disagree with that,” he said. “But our ability to keep people alive is a remarkable testament to the quality of health care, in many ways. It also results in people taking expensive medication if they have other medical problems.”
Sen. Mike Johanns, R-Neb., who opposes the health care bills, said he has heard from small Nebraska businesses whose premiums are increasing as much as 35 percent. Even if all insurance company profits were eliminated, the savings would be only 2 percent, Johanns said.
The health care bills as now written would increase costs and add taxes that small businesses would have to pay, he said.
“It has a punishing impact on small business.”
Johanns suggested three changes to reduce costs: Allowing insurers to compete across state lines; letting small businesses form health insurance pools to spread the risk of costly treatments; and limiting malpractice lawsuits that prompt expensive and unnecessary “defensive medicine.”
Mercer Group surveyed 2,914 employers across the country.
The 29 Nebraska employers surveyed have a total of about 87,000 workers. Their average health care cost increase was 11.5 percent this year, the highest of any state and more than double the average national increase of 5.5 percent.
If the survey results are accurate, Nebraska employers' health care costs have risen 20 percent in two years.
Mercer's Mark Whiting said he wasn't sure why Nebraska ranked highest in the survey. One reason could be that since the recession has been less serious in Nebraska, more employers retained more benefits, he said.
The average cost to Nebraska employers of $7,714 per employee remains below the national average, possibly because businesses require higher deductibles and use more consumer-directed health plans, Whiting said. But because employers already have reduced expenses, there could be less “wiggle room” for employers to adjust expenses this year as medical costs increased, he said.
A larger sampling of employers might have resulted in an average increase closer to the national 5.5 percent average, he said.
The company samples employers based in part on population, so small-population states like Nebraska end up with smaller samples.
For 2010, the Nebraska employers in the survey said they expected an 8.5 percent cost increase if benefits remained the same. But they also said they expected to reduce benefits to limit the increase to 6.4 percent.
About half the employers surveyed said they would shift costs to their employees by raising deductibles, co-payments or monthly premiums. The other half said they wouldn't ask employees to pay more.
Mercer Group doesn't release the names of the employers in its survey.
In Iowa, the survey contacted 72 employers with about 150,000 employees with an average benefit cost of $8,458 each, up 4.8 percent, Mercer said. The percentage increase was among the lowest in the survey.
The Iowa employers expected an increase of 8.3 percent if they retained the same benefits in 2010, but planned to cut benefits to limit the increase to 5.5 percent.
O'Brien, the Omaha chamber director and small business owner, said her increase in insurance premiums is the equivalent of adding one or two employees who could add to the firm's productivity.
“My whole life, I just wanted to keep doing great work all the time and grow, but at some point you realize you're not in control of that cost,” she said. “So, is it worth trying to be big and trying to grow a strong foundation for a big business here?”
Contact the writer:
444-1080, steve.jordon@owh.com
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