Premiums slow

Health insurance premiums have seen a steady decline in growth over the past few years, but why it is occurring is summarized in Modern Healthcare Online.

The insurance industry loves to take credit for this and as stated in the article,

America's Health Insurance Plans immediately issued a news release attributing the slowdown to its members' "cutting-edge" cost-control efforts, such as tiered prescription-drug formularies, pay-for-performance initiatives, and disease-management and prevention programs.

"Our community has reinvented cost-containment strategies and is deploying a new generation of tools and techniques to stretch healthcare dollars and mitigate the burden of rising medical costs," AHIP President and Chief Executive Officer Karen Ignagni said in the news release.

But as always, there is the rest of the story.

Providers argue that large insurers, many emboldened by a spate of recent megamergers, have been able to ease up on premiums predominantly because they've been clamping down even more on reimbursements. "These `savings' are coming off the backs of providers," said Martin Wasserman, executive director of the Maryland State Medical Society.

"Insurers are using their market dominance to hold hospitals hostage," added Gary Gaube, president and CEO of 150-bed Landmark Medical Center in Woonsocket, R.I

The real impetus for the slower rise in premiums is probably related more to the demands of frustrated employers who are choosing to drop insurers altogether because of the double digit rises year after year while watching the insurers post huge profits.

"Employers are putting pressure on insurers to demonstrate their ability to hold down costs, and clearly a lot of that is being driven through tougher negotiations with providers," said Henry Loubet, chief strategy officer for insurance broker Keenan & Associates and former CEO of UnitedHealth Group's Western operations.

It used to be that large Hospital entities would throw their weight around and force insurers to cough up more money. But according to some recent data, the power is shifting back to the insurers.

This really rings hollow with many physician providers when we see large insurers, including many of the nation's not-for-profit Blues plans posting record profits, boosting their reserves and paying executives hefty salaries and perks. An example is the Rhode Island Blues that holds $326 million in reserves and is expected to post $60 million to $70 million in operating profits this year.

Physicians are legally restricted from collective bargaining and therefore cannot do what the hospitals and insurers have continually done. Therefore, we become the easiest target for the financial cuts along with the patients who also have limited voice.

As WCA President Bill Mooney said, "Here we have hospitals and doctors who are in real trouble, and then we have the paper-pushers walking away with carloads of money and not wanting to help the industry where they make all that money. There's something very wrong with this picture."