Rick Dennison will never forget the thoughts that went through his mind in those moments after his accident. It was three years ago, and Dennison (not his real name) was driving on a two-lane highway in southern Utah when a driver coming the other way lost control on a curve, smashing into Dennison’s sedan and causing both cars to roll.
His vehicle was totaled, but Dennison escaped with minor injuries—a couple of scrapes and a bruised rib. He knows it could have been a lot worse, for more than one reason.
“I recall sitting there waiting for the paramedics to arrive to check me out,” he says. “And while I was laying there, wondering if I was seriously injured, I also thought, ‘If there’s something wrong that could involve long-term care, I should just tell them to let me die. I don’t have health insurance and I’ll never be able to pay them back.’”
But, within a few weeks Dennison had a new job and was able to get health care benefits from his employer that both he and his company could afford. Today, he might not be so fortunate.
Like the rest of the nation’s employees and employers, Utahns are facing increased economic challenges related to obtaining or providing health care insurance. Though Utah still has the lowest health care costs per capita in the United States, according to a recent study by the Dartmouth Medical School, paychecks are being increasingly impacted by higher premiums for both workers and their employers.
But, are the costs of prescription
drugs and medical treatments completely to blame, or has the challenge been patient-imposed?
“Health care costs mean different things to different people,” says Norman Thurston, economist for the Utah Department of Health. “The most common mistake is to gloss over the difference between price and quality. Costs themselves have basically kept up with inflation, maybe 1 or 2 percent a year. The premiums we are all paying have been driven by utilization.”
Thurston says that a combination of advanced technology and a keener sense of liability created a 12 to 20 percent rise in premiums, sometimes on an annual basis.
“As new procedures have been made available, there is a higher level of expectation from both the patient, and the practitioner treating them,” he says. “Subsequently, we’re catching illnesses or seeing severity of injuries that we didn’t before, which in turn often leads to other treatments.”
Those treatments are more extensive and expensive. For example, the cost of an x-ray for an ankle injury might be just a fraction of the cost of an MRI. But doctors, and often patients themselves, are opting for the MRI to ensure the extent of an injury is fully diagnosed.
“The cost of individual components of health care aren’t rising as much as the consumption for them,” says Greg Poulsen, senior vice president of Intermountain Healthcare. “Patients ask for prescription medications instead of over-the-counter medicines. Every time we do that—ask for higher treatments or more expensive prescriptions—we push the cost envelope higher.”
To offset those expenses, health care insurers raise premiums. Consequently, employers provide plans with higher deductibles and sometimes fewer benefits. Poulsen says both employers and employees are being more selective in the options they choose. Not everyone needs maternity insurance, of course, but other “menu items” are sometimes being left out of plans as well, such as vision, dental and counseling. Still, it’s the higher premiums and larger deductibles that employees are noticing the most, along with higher co-pays, fewer prescription drug options and higher out-of-pocket expenses. Treatments they had once considered are put off, even preventative measures such as regular checkups and cancer screenings. Those decisions can lead to even greater health woes, and the problem of higher health care costs becomes a vicious circle.
During the 2009 Utah Legislative session, proponents of defined contribu-tion insurance plans are hoping lawmakers will take the first steps toward more or less reinventing the way we buy and pay for health insurance. Unlike traditional defined benefit plans, defined contribution would take the same approach to health care that 401(k) programs take toward retirement—allowing the consumer to pick his or her health care alternatives.
Also, The Salt Lake Chamber of Commerce has created a “Business Bill of Rights and Responsibilities” for health system reform.
“We feel that the people who fund it have responsibilities,” says Natalie Gochnour, an officer of SLCC. “In a nutshell, when it comes to health care insurance, everyone should have it, it needs to be portable, it should be paid for with pre-tax dollars and chosen by the employee, and is rated based on a broad-based risk pool.” Gochnour adds that consumers need more information about costs and procedures, and that they should have expanded choices and, thus, benefit from the value of competition. She also says health care plans should be fine-tuned to the needs of those paying for them.
Poulsen adds that employers need more choices as well.
“When your employer is providing health insurance, they’re writing a pretty big check every month,” he says. “For employers, especially those with small businesses, we need to look for ways to keep costs under control. Cost-sharing in a program like defined contributions can allow the focus to be on services employees need. That kind of partnership can benefit both employee and employer.”
Poulsen feels reform can be done responsibly, but cautions that “preventa-tive services are sometimes excluded, but half of all chronic illnesses occur in patients who have not used preventative measures like checkups and annual testing. In the short or long run, costs are going to increase for medical treatments like they do for everything else, but we need to make sure that preventative care is covered and encouraged.”
Whether defined contributions become a reality in Utah, health care programs may rest in the hands of state legislators. Whatever decision is reached this year, or in the future, health care is certain to change, and new ways to pay for it are inevitable at a time when we demand, and expect more, from our health care providers.