Rochester hospitals, employers, insurance companies and patients are feeling the pains of recession
05 01 09 - 17:11
Recession ups health care costs in Rochester
By Chris Swingle and Justina Wang - Democrat and Chronicle.com
Amid President-elect Barack Obama's promises to expand health care, years of rising medical costs, heightened by the recession, are stinging Rochester.
Area hospitals, employers, insurance companies and patients are all feeling the pain. The recession has stripped away health insurance for many of the jobless, while those who still are working are left to shoulder more of the costs. That leaves many people just one injury, one high-priced prescription or one emergency appendectomy away from a medical and financial catastrophe.
The reasons are all connected. As the population ages and more expensive procedures and prescriptions exist, costs rise for insurers. They charge more to employers, who pass on more costs to employees.
Patients pay more out of pocket, and some drop insurance altogether.
Meanwhile, governments trying to control costs for taxpayer-funded insurance programs trim reimbursement rates, making fewer doctors willing to accept Medicaid patients.
As a result, many individuals are struggling to get or afford health care.
"We're seeing middle-class people," said Diane Hendricks of Rochester General Health System, whose team helps people enroll in programs that help pay for care. "They're embarrassed about asking for help."
Patients skip lab tests or follow-up visits because of cost, she said. "That's the part that upsets me — when you see the fear in their eyes."
On the plus side, health insurance coverage is more common here than in many other places. Monroe County has the third lowest uninsured rate in the state among people under age 65 — 11 percent. The state average was 15 percent and the national average was 17 percent, according to 2005 U.S. census statistics released in October.
This still means that 80,000 people in Monroe County lack health insurance, including about 13,500 children and teens. Most are eligible for government-subsidized insurance.
Even people with health insurance are having a tough time, adding to the stress of being ill.
Tammy Van Winkle, 48, of Greece has daily pain in her hips, back and legs from bursitis, spinal stenosis and degenerative disk disease. It also hurts to pay $346 a month in health insurance premiums, nearly $400 a month for her 10 prescription drugs and $25 for each visit to her 13 doctors.
Van Winkle, who is on disability leave from her job as a building services supervisor at Rochester Institute of Technology, also is having problems with one foot but hasn't seen anyone because she owes the podiatrist.
Kim Murray, 49, of Rochester has Medicaid but likewise struggles to meet his health needs. His limited income from disability payments makes it hard to afford the medication co-pays for his heart problems, diabetes and depression. He can't always get to the pharmacy. He needs help from relatives to have enough food. "That makes you feel that small," he said.
His doctor counsels him to eat better and not skip his pills, but, Murray said: "That doctor's got a job. He's got a car. He has a way to go get his medicine."
People with diabetes whose blood sugar levels are uncontrolled are at greater risk for amputation, heart attack or stroke — all costly to the patient's quality of life and to the taxpayers funding public care, said Dr. Tom Campbell of Highland Family Medicine, which serves many patients with Medicaid.
Climbing costs
Medical costs are out of control for Bernice Rinebold, 73, of Webster. Crohn's disease, a condition that can inflame parts of the digestive tract, requires her to take some drugs that have no generic version. She takes fewer pills than prescribed and holds off on refills but is still $6,000 in debt for medications from the last year and a half. Each year, Rinebold falls into the so-called Medicare doughnut hole: Once Medicare has paid for about $2,700 in medications, then she has to come up with about $4,000 for her prescriptions before catastrophic coverage kicks in.
"I feel very frustrated," she said.
Nationwide, more than a quarter of adults reported serious problems paying for health care and insurance, according to a Kaiser Family Foundation poll in April. More than four in 10 people said they or a member of their household put off needed care, skipped a recommended test or treatment, didn't fill a prescription, cut pills in half, skipped doses of medicine or had problems getting mental health care the previous year.
As patients navigate the complexities of health insurance, some abandon even low-premium plans. Philomena Allen, 47, of Penfield gave up her $20-a-month insurance when the co-pays of $15 per drug and $25 per doctor visit became too high. She was seeing a nurse practitioner every two weeks in early 2008 for problems controlling diabetes, and the bills added up. Allen now gets care at the no-fee St. Joseph's Neighborhood Center, 417 South Ave.
Scheduled visits at St. Joe's were up by about 2,000 last year, to 14,000 visits, said center director Christine Wagner. Patients have no insurance or can't afford the part that insurance doesn't cover — such as the co-pays for mental health, physical therapy, chiropractic or other care. The center has 240 volunteers and needs more to keep up with the demand. But centers like St. Joe's can never solve the overall problems with the health care system, said Wagner.
Systemic impact
The hospitals, insurers and insurance-providing employers are trying to control health care costs and stay in business.
Rochester hospitals report more patients aren't paying bills and more are applying for financial assistance. At Strong Memorial and Highland hospitals, unpaid care has grown 85 percent since 2004 to nearly $40 million estimated for 2009 — which would be 4 percent of the bills, said Len Shute, chief financial officer.
Meanwhile, the revenue of hospitals from Medicaid is threatened. Gov. David Paterson has proposed slowing the growth in aid to hospitals and nursing homes — which would mean a loss of $30 million in funding to Strong and Highland, for example. That could be countered by Obama's proposed economic stimulus package that would include funds for Medicaid and health information technology.
Hospitals have to pursue bill collection to survive, but they provide care first and then sort out the payment, said Warren Hern, Unity Hospital's chief financial officer.
John Midolo, vice president of patient financial services at Rochester General, said the state and federal revenue picture for 2009 is murky, "So we're planning for the worst."
Meanwhile, investments by the area's largest insurance companies declined this past year, while costs rose with higher prescription drug prices, more expensive procedures, and obese and aging patients needing more care for chronic conditions.
For the first time in a decade, nonprofit Excellus BlueCross BlueShield, the largest insurer locally, is expecting a drop in net income for the past year. The next largest insurer, Preferred Care, posted a more than $20 million loss for the first three quarters of 2008.
Both companies have announced major increases in their 2009 rates. Excellus premiums will rise by an average of 9.5 percent, and the rates for Preferred Care's most popular community-rated insurance plans will climb between 13 percent and 15 percent.
Preferred Care spokesman Michael Traphagan said the higher rates will strengthen the company's budget, making up for products that were priced too low in 2008 and recouping some market losses. But the financial problems also have come from the rising costs of health care, which likely will not go down, he said.
"The whole idea now is to stop the upward spiral, much more so than reverse it," he said.
Business decisions
Businesses have responded by changing health care options and shifting even more costs onto workers — a trend that is pronounced this year. While Preferred Care's TriVantage plan was once the most popular offering by employers, companies this year favor Basix, which lowers employer costs by charging higher co-pays for patients, Traphagan said. Employers also chose fewer health plan options.
Cenette Burdine, Excellus' vice president of brand management, said employers have started switching to plans with higher co-pays, like Excellus' Blue EPO, and to the lower-cost Healthy Blue incentives program, with adjustable co-pays and deductibles.
Sandy Parker, president of the Rochester Business Alliance, said most local companies are not eliminating health insurance altogether because they fear losing employees. But many are beginning to cut back in other ways, such as giving smaller salary raises or trimming retiree health benefits, a move Kodak and Xerox announced in 2008.
Employers in the area spent an average of $242 per employee each month on single coverage in 2008, up 13 percent from the previous year, according to an RBA survey of companies released in October.
Ian Cunningham, chief executive officer at Scene Genesis, an insurance claims company in Perinton, said health care costs have become so steep, he's decided against hiring 11 employees budgeted for this year and will have to make health plan changes. The 15 percent rate increase expected in 2009 is the biggest he's seen.
"We just can't absorb it," he said. "Where's that money going to come from?"
Employees, he said, are concerned. "It's basically just going to come out of their pocket."
An uncertain future
Shirley Overmyer, 59, of Brockport, who retired from Kodak, will lose dental and life insurance this year.
"When I retired a couple years ago, I was expecting that I would have these benefits for the rest of my life, and I wouldn't have to worry," she said. "All of a sudden, things are coming crashing down."
After retirement, Overmyer took a part-time job as a teacher's assistant at Crestwood Children's Center and is pushing for more work hours so that she qualifies for medical and dental coverage.
Xerox retiree Richard Long of Penfield said he and his wife had counted on $2,400 annually, once promised by the company, for health benefits.
"We now have to rely on our Social Security and plummeting investments," said Long, 65.
Companies also are trying to trim costs through incentives. Nearly one-third of local companies offered to pay workers between $100 and $4,000 in 2008 if they chose not to enroll in the company's health care plan, according to the RBA's survey. Another 5 percent are considering those incentives.
Wary of urging people out of health plans, some insurers and employers point to a different type of incentive as the solution. Plans like Excellus' Healthy Blue reward choices like joining a gym or quitting smoking. Over the long run, Preferred Care's Traphagan said, those types of plans will promote healthier lifestyles and could drive down the costs of medical care as fewer people need treatment for preventable chronic conditions like diabetes or heart disease.
Some companies have gone further, adding health requirements to their plans. Penfield-based Paychex Inc., for example, has started requiring employees enrolled in its medical benefits to refrain from smoking or participate in a tobacco cessation program, complete a health-risk questionnaire, and participate in a health screening every 24 months. Those who don't meet the requirements have to pay higher deductibles. The company's wellness program also awards up to $300 each year to employees who take steps such as getting flu shots or enrolling in an online health course.
Paychex has seen health care costs continue to rise. "But we view this as a long-term investment for us, not something that turns around tomorrow," said Jake Flaitz, director of benefits for Paychex.
While private insurers and employers are trying to control costs, governments are trying to trim costs in public insurance programs.
The state has stepped up efforts to find and enroll eligible Monroe County residents in government-funded programs through an ad campaign. The state also expanded eligibility for Child Health Plus, so that children in a family of four earning up to $84,000 qualify. Monroe County is trying to control Medicaid costs by encouraging preventive care for patients with mental health issues to help them avoid costly emergency room visits, said Kelly Reed, county commissioner of human services.
Some say that the financial crisis may force individuals and the health care system to improve efficiencies or find better ways of operating.
Even Campbell, from Highland Family Medicine, said he's making more decisions based on cost now that his insurance plan requires him to pay the first few hundred dollars of health care himself. He was shocked to find that Advair, a two-drugs-in-one steroid inhaler for his asthma, cost $140. He switched to a cheaper set of drugs that are less convenient but just as effective.
Wagner, from St. Joseph's, hopes that the reality of more people struggling to afford care will prompt more demands for the current health care system to be improved.