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State Health Insurance Rates Among Highest, Fastest Growing in the US
By Elaine Grant on Friday, September 4, 2009.
New Hampshire residents pay the third highest health insurance premiums in the U.S.
It hasn’t always been this way. Our insurance premiums skyrocketed between 2003 and 2008, growing faster than those of any other state in the nation.
NHPR’s health reporter Elaine Grant has more.
The numbers are simple and stark: individual health insurance in New Hampshire costs about $5200 a year.
That’s up from about $3500 in 2003 – an increase of 47 percent, according to a new study by the nonprofit Commonwealth Fund.
The numbers are drawn from the Agency for Health Care Research and Quality, a federal database considered the gold standard for health insurance research.
New Hampshire’s dramatic growth in individual rates is almost double the nation’s average rate increase.
And it far surpasses the growth in individual health insurance premiums in any other state.
Families, too, have it tough.
It costs more than $13,500 to cover the average New Hampshire family, the third highest premiums in the country.
The question, of course, is a simple one: why?
The answers, however, are complex.
Karen Davis is president of The Commonwealth Fund.
She says the biggest cost driver nationally is a huge increase in prescription drug prices over the last decade.
But that probably doesn’t affect New Hampshire more than any other state.
The second biggest cost driver?
Davis: “The consolidation of the insurance industry. As there are fewer choices available, premiums have increased.”
And in the last decade, there has been a lot of consolidation in New Hampshire’s insurance industry.
Today, Anthem is the state’s largest provider.
In 2007, Anthem covered almost 60 percent of the state’s insured.
When asked for comment, Anthem referred us to America’s Health Insurance Plans, the industry’s trade association.
AHIP’s spokesman, Robert Zirchelbach, disputes the Commonwealth Fund’s arguments.
He lays the blame for high premiums on the health care providers.
"The data simply doesn’t show that health plans are able to dictate prices in a way that’s driving up health care costs. In fact, the reverse is true, that provider consolidation which has been happening a lot more over the years, has proven to be a key driver in bringing up the cost of care."
In fact, a 2006 Robert Wood Johnson study showed that hospital consolidation caused inpatient prices to rise by at least 5 percent.
And over the last decade or so, New Hampshire hospitals have become more dominant in their communities, for instance by buying physician practices.
But neither argument fully explains New Hampshire’s dubious status as one of the most expensive health care states in the country.
Leslie Ludke, a health policy analyst at the New Hampshire Department of Insurance, says there are only two reasons why premiums increase.
She says either we’re using more medical care, or the price of that care is rising.
"I think, actually, probably in NH, we have both."
Over the last several years, inpatient hospital stays have declined.
"But there’s been great increases in outpatient services, great increases in for example radiology – CT scans, MRIs, those kinds of things. Those are very expensive."
And while New Hampshire is one of the oldest states in the nation, that growing use of imaging and other tests isn’t simply a function of demographics – but of business.
So says Jim Squires, executive director of the Endowment for Health.
He says New Hampshire health care providers have invested heavily in expensive technology in an effort to compete with each other.
Squires: "Now once you buy a $2 million piece of equipment, you have to use it to pay it back. And there are a lot of $2 million pieces of equipment in our hospitals."
Yet one more reason for our high premiums could be New Hampshire’s small business economy.
Small companies pay more for health insurance – and more of their premium dollars go to the insurance industry for administrative expenses and profits.
And finally there are the uninsured.
As the economy has crashed, more and more uninsured and underinsured patients are unable to pay their bills.
And so health care providers shift that cost, increasing premiums to take up the slack.
It’s a vicious cycle.
As more and more employers and families can no longer afford decent health insurance, more people will be unable to pay their medical bills.
And premiums will continue to rise.
The situation, Squires says, is untenable.
Squires: "I think it puts the health care industry where the mortgage industry was in 2007. Unless there are some substantial changes, there will be a collapse of some provider institutions in New Hampshire."
What happens here over the next 48 months, Squire says, will depend largely upon the results of the national health care overhaul debate.
For NHPR News, I’m EG.
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Reforming insurance company practices might be a pragmatic approach to universal medical care while eliminating the need for insurance companies remains politically impossible. Only by eliminating insurance premiums that pay for health care will this nation be able to achieve universal coverage - because of the requirement for business profits.
The federal government should not require every American to purchase insurance unless it also requires that every business boost worker paychecks to a "living wage" level. Many cannot afford to pay the ever-increasing premiums (of plans with larger and larger deductibles and narrower and narrower coverage), and with regulations that prohibit competition across state lines, nothing short of a public plan option will force insurance companies to cut administrative costs and improve access and quality of health care.
Most people will agree that reform should reduce the cost of health care and prescription drugs, enable people to access affordable, quality health care, that the federal government should not increase Medicare and Medicaid costs to states, that health care should be focused on wellness and prevention and higher quality of care provided by doctors and hospitals, that we need lowered malpractice costs and change in tax rules, and that government should not borrow any money to pay for universal health care access.
There are additional cost drivers you did not mention:
1. How do state-wide mandates ("guaranteed issue", mandated coverage for certain types of care like fertility treatment, etc.) contribute to New Hampshire's high costs?
2. How does the malpractice climate compare to other states? Areas with poor medical malpractice climates face pressure on costs from both an insurance standpoint and in the practice of defensive medicine.
Finally, all states across the nation have multimillion dollar health care equipment they need to pay for. Does New Hampshire have more than the average? If not, it doesn't explain the premiums.
Your comments are spot-on. There is more than a four-fold increase in the premiums of the most basic HSA eligible health coverage between New York and Ohio.
Individual state laws require more or less minimum coverage in health insurance policies. The result is the states who demand the most things be covered also have the highest premiums.
It should be recognized that health care and health insurance are two separate things. I personally believe that the escalation in health care costs is driven by the disconnect between the patient and the cost of services. If someone else is paying for it, any patient would want the best medical care available.
Actually, I believe the greatest reason for the high cost of care in NH is the unsustainable cost shifting from the State. Each year, the state legislature balances its budget by lowering the reimbursement to health care providers. In turn, the health care providers cover their costs by raising their rates to insurance companies. In the end, those who buy insurance (companies or individuals) pay a tax through higher premiums to pay for state services. It is time for the state legislature to show some leadership and pay for state services through direct revenue and not through a shift to those with insurance.
Perhaps your story should have covered the root of the issue -- the legislature's inability to own up to its responsibility (Republican or Democrat).
The federal government should not require every American to purchase insurance unless it also requires that every business boost worker paychecks to a "living wage" level.
As a New Hampshire provider I find it interesting that part of the blame is put on the physicians increasing the premiums. Physicians are contracted to receive a payment and in most cases have to prove the reason for the treatment. More times than not we are fighting with the insurance companies for payment on a physical. In our office nearly half of our charges are listed under "provider responsibility" which in business terms means we have to eat the cost. Physicians are not allowed to claim that loss on taxes either so it is money lost period. To give you an idea an initial visit in our office which includes diagnostic testing, radiographs, full exam, and consultation is billed out at 185.00 we receive 90.00 and due to contract we are not able to recover the cost from the patient it is just a loss. Now imagine if you will, that half of your pay was taken every week with no recourse to get it back, with malpractice, 150,000.00 and up in student loans, and every other everyday expense that everyone has. Trust me it is just as hard for us to make ends meet as it is everyone else. It is very easy to blame the doctor but, people need to realize that in order have things "approved" by the insurance company it usually requires significant proof which means more tests and more time and more co-pays. I think it would be wise to take a look into to insurance companies, find how much of an increase in pay the top CEO's have received or their pay every year in general. What are they really doing to help the consumer? Start drilling the pharmaceutical companies make them explain and PROVE why the medications are so expensive, have them prove that they are spending money on research, rather than using the general population as a research pool. Maybe this way so many people will not become very ill and require extensive hospitalization, further medication, or like one of my current patients remain on dialysis for the rest of her life due to improper medication and unlisted side effects. Now let us ponder where is the real increase coming from, in the end it is not the provider it is the insurance companies themselves increaing the cost.
As a self-pay patient, I am appalled that Doctors offices ignore patients plees for a "bargained for" rate: In your example $180 for visit, but insurance pays $90. I have to pay $180. Makes me nutty. Also, an intial visit in MI to say a Internist (most doctors) is roughly $200 without any tests. I only wish we had to pay $180 for all the items you mentioned.