By Sylvia Hall
Posted by Sylvia Reports by Sylvia Hall on October 14, 2010

When it comes to health care costs, Roy Berlin is in a quandary. Over the past 10 years, the cost of providing health insurance to his workers has doubled. But as president of the family-owned Berlin Metals in Hammond, Ind., he is determined to pay the majority share of health insurance costs for his 65 employees even though the bill now totals more than the rent for his company’s building. Covered by the same plan, Berlin is deeply troubled by the upward trend.

“All I can tell you is that the way we’re headed right now is unaffordable for people, unaffordable for business and unaffordable for companies,” Berlin said. “I can say that in 10 years that we won’t be able to pay the same plan that we have today.”

Berlin’s story is a refrain heard across the nation as more and more Americans find themselves paying massive bills for basic insurance coverage-- or not able to afford it at all. The number of Americans carrying health insurance decreased in 2009 for the first time since 1987 when the government began tracking health insurance data, according to the U.S. Census Bureau.

The struggle to pay health-related bills will likely get harder before it gets easier, if the projections from the Lincolnshire-based benefit consulting firm Hewitt Associates LLC, come to pass. The firm estimates health insurance premiums will rise by nearly 9 percent in 2011, in a trend Hewitt analysts expect to continue for several years.

Insurance companies say the solution to the problem isn’t easy and doesn’t lie solely in their hands. Scot Roskelley, a representative for health insurance giant Aetna Inc., said insurance costs closely mirror the price of actual care.

“The price of health care is going up rather substantially,” Roskelley said. “As we develop contracts with providers, as we negotiate those, we try to keep prices down as much as possible.” He declined to comment on future rate increases.

As consumers pay more, they’re also getting more sophisticated care, said Will Manning, Ph.D. at the University of Chicago’s Harris School of Public Policy Studies. He said medical and technological innovations in the past century have dramatically improved medical care and consequently driven up costs.

But he said breakthroughs like magnetic imaging, genetically engineered drugs and new chemotherapies don’t completely explain the astounding cost increases. Medical inflation is increasing at a much higher rate than general inflation, he points out, which means that most people’s paychecks just aren’t keeping up with the price they pay for health care.

“Even when you allow for the fact that some of this is better care than we have had before, just the sheer amount of what we pay for health care has become quite staggering,” Manning said. “Part of it is that the system we have is not particularly efficiently run. People have a diminished set of incentives to keep costs down.”

Once a patient pays the deductible amount, Manning said, there’s very little reason for him or her to cut health costs or choose generic medications over brand-name drugs. Additionally, Manning said people do not have enough incentive to make healthy daily choices, which he said elevates health care costs over time. He said health insurance rates could decrease a great deal if plans included incentives for people to choose generic drugs or to exercise.

A national health insurance overhaul that went into effect this September could intensify the problem before it helps, some experts say. By 2014, the Affordable Care Act is scheduled to eliminate several common barriers to health coverage, including preexisting conditions, insurance plan cancellations and preventative care costs. Although the bill includes a tax credit on insurance premiums paid by business owners with 25 employees or less, John Vlajaovic, a Hewitt Associates principal, doesn’t expect the bill to help solve the larger problem.

Adding more people into the health care system without significantly changing it only spikes costs, Vlajaovic said. He said he believes future reforms will eventually help adjust the overall health care system itself, tempering the rate of cost increases.

“Even though it hasn’t solved the problems, [health care reform] has opened up discussions about the role that employers will play in the delivery of health care benefits going forward,” Vlajaovic said. “And I think that will play in the solutions that we wind up with.”

That will be too late for small business owners like Chicago attorney Elliot Richardson who have already had to sacrifice some health insurance benefits to keep employees on the payroll. Richardson said when he started his law firm, he offered full health coverage to his 25 employees without co-pays or deductibles.

“It was a very sad day for me when I had to switch to a different insurance company and institute a co-pay and a deductible because we just couldn’t afford the price of health insurance any longer,” Richardson said.

Concern about health care costs prompted Richardson to run in an unsuccessful bid for Congress earlier this year. He still champions the issue in his role as president of the Small Business Advocacy Council.

Richardson hopes to provide some cost relief to the 145 businesses who are members by pooling them together into one health insurance plan. Member businesses are in the process of filling out paperwork for the program.

But for most people, little relief is in sight. Aetna’s Roskelley said even in the face of cost increases, consumers have several options to keep costs down. He suggests that insurance policy holders read and understand their plans, page by page. He said most customers who peruse their plans find savings accounts, discounts and additional coverage they never knew they had. He also suggested visiting planforyourhealth.com, a website aimed at helping customers find the best deals for health insurance.

This article was posted by Sylvia Reports by Sylvia Hall on October 14, 2010 for the orignal post please visit http://www.sylviahallreports.com/2010/10/rising-health-care-costs-leave....