|Health care rates to soon increase|
|Written by Cassie Monroe, Daily Vidette Staff Writer|
|Tuesday, 27 October 2009 21:40|
The cost of health care is expected to increase by 15 percent next year, according to federal officials.
This increase will cause monthly premiums to be over 100 dollars for the first time in history. This issue adds to the health care debate among Congress members and calls for a change in the system.
“The cost of health care premiums is increasing because the cost of health care, physicians and hospitals is increasing,” Doug Schwalm, professor of health economics at ISU, said.
According to Schwalm, premiums increase for two reasons. First, the increase can be caused by the “over-head” or administrative fees. This is the money insurance companies pay in order to shop around for cheap, but good quality health care for their customers. This part of the premiums has not changed much over time, but the second cost has recently increased greatly.
The bulk of the premium provides funds for physicians and hospitals. This cost has increased more than the rate of inflation for many decades.
“Employers have to spend money on their employees, and we could call the cost of an employee the ‘total compensation,’” Schwalm said.
The total compensation is split between the cost of benefits and salary.
“It doesn’t really matter to the company how they pay their employees, and since there are tax benefits to having benefits, most companies will pay part of the total compensation to their workers in the form of benefits,” he said.
If the cost of health care goes up, the cost of the total compensation also rises. There is financially no difference between giving employees a raise in salary or increasing the money spent on benefits.
“Trying to buy insurance as an individual is going to be more expensive than trying to buy it as group,” Schwalm, said.
For this reason, employers are shifting part of the rising cost of health care over to their employees. According to an article by MSNBC, most company-sponsored health care programs gave employees very little financial responsibility for the cost of their health care for the past decade.
“I think it’s unfair that doctors and hospitals can charge more to help people. Their main concern should be helping people,” Matt Schwellenbach, junior political science major, said.
According to the Kaiser Family Foundation, over the past ten years the average annual cost of health care has risen 131 percent – more than four times the rate of inflation. As a result, many companies have dropped health care coverage for their employees altogether. As of this year, only 60 percent of employers offer health care benefits, a nine percent drop from 2000.
“If workers are not shopping around, looking for physicians who charge less, or planning ahead of time to use lower-cost hospitals, then it is a lot easier for physicians and hospitals to raise prices,” Schwalm said.
Companies are hoping that if employers take on more of the financial burden of health care coverage, then they might become better consumers of heath care. For example, they might purchase a cheaper generic drug instead of a name brand.
According to Schwalm, every country has problems with their health care system, not just America, although our problems might not be the same. Other countries are dealing with cost control and coverage problems that we do not have.
“There is no silver bullet that can solve the problem, and most likely, we simply will swap one set of problems for another,” he said.