Healthcare costs

It’s time to talk about Healthcare costs and how they are effect your premiums.  Last week The Contra Costa Times had an article titled Health costs, benefits rising.  The article was mostly about what employers can expect for 2011 as far as premium increases and then went on to say that insurance reform is not the primary reason for the projected rate increase of 9%.  I’m not disputing the article in any way, but the article was lacking some vital information.  Way back when, I actually took two years of journalism while I was in high school.  My teacher, Mr. Lloyd, taught us how to write a story that was factual and unbiased and, that a journalist writes in a reverse pyramid telling the most important points of the story in the beginning and the lesser important things towards the end.  That way, the important stuff isn’t as likely to get nixed when the editor has to shorten the story.  But of course I don’t see that in today’s newspaper articles.  It’s more about gaining readership and less about reporting the facts.  Here’s the link to view the article on

Healthcare costs.

I see over and over again in the news about the cost of rising health care premiums and I notice over and over again an important missing piece of information.  This drives me absolutely crazy!  This missing piece of information is affected  by insurance reform but it has been going on for quite sometime.  The missing information is about cost shifting.  Not cost shifting in the sense that employers have to pass on larger portions of the premiums to their employees at renewal, but the bigger picture of cost shifting as far as contracting with the carriers have taken on and how that cost shifting trickles down to premium increases.

Years ago, when Medicare and Medicaid (Medi-Cal in California) reimbursed providers for services, the reimbursements were fair and the providers were not usually operating at a loss.  The cuts to reimbursements from these two sources has been devastating over time and will continue as insurance reform continues under PPACA (Patient Protection and Affordable Care Act).  This leaves our providers no choice except to negotiate higher reimbursement with the insurance carriers and this is what trickles down to all of us in our premium increases.  There are of course many factors that affect our premiums, prescription drug usage, increasing chronic health conditions (obesity, diabetes, depression ) the cost of medical technology and the use of the technology.  The cost shifting due to the cuts in Medicare and Medi-Cal reimbursement always gets left out of the mainstream source of information.  But we cannot expect our providers to operate at a loss since eventually they will no longer be in business.  But somehow it all comes down to someone has to pay for the expenses.  The government cut the reimbursements because they are under pressure to keep costs down.  We all pay for the cost through the trickle down of higher premiums.

Please don’t misinterpret my meaning here.  I do not think insurance reform should go away.  This industry is long overdue for corrections. I see that everyday.  I just want you, as employers and consumers of health insurance to see the fuller picture.  I’m very passionate about sharing the information with everyone.

So what can we do to fix this situation?  Well, I’m not psychic so I can’t give you a clear answer on what the future holds.  But I can help you look at the benefits and plan design.  Unfortunately, I think the rates will continue to increase.  Insurance reform will have some impact in the next couple of years, but the real changes have yet to come.


4 Comments on “Healthcare costs”

  1. Pam Ben Rached says:

    Your recent post brings up some good points. As a small business owner, these increases are killing us. Besides that, as the premiums increase the amount of co-pays increase thus giving us less for more $$.

    I feel forced to put up with it as we are not poor enough or rich enough to not care. We need to find a way from these premiums rising so much every year and for the average person not to be scared to get medical treatments because they’ll go broke from co-pays.

    People also need to take better care of themselves. Those of us that are aging but that are exercising and eating right should be rewarded. I’ve haven’t seen my Kaiser premiums drop any from my efforts. You just hit a magic age and they go up regardless of circumstances.

    I am very happy to see the GOP get control of the House and part of the Senate. Now maybe Mr. Obama will stop his wanton ways and listen to us to do some real reform and not his own agenda. By the way, I am tired of him calling people at $250,000 rich. If you live in the Bay Area and/or you own a business, you’re “rich” to him. LOL…..

  2. Andre Cuff says:

    Why can’t all small businesses join together to form a group to get a more competive rate for Health Insurance?

    Also, according to my bills, trickle down happens with work comp insurance.

    • loiskubota says:

      Andre, unfortunately, that’s not legal! Don’t forget we are paying 2012 rates for 2012 technology. We all want the best care and pay zero dollars for it, but that would require that healthcare workers volunteer!

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