‘Express Sessions’ Examines the Health Insurance Industry

The panel looks on as Stony Brook Southampton Hospital Chief Administrative Officer Robert Chaloner responds to a question during the Express Sessions - Focus on Healthcare event held at the American Hotel on Friday, 10/26/18. Michael Heller photo

If one were to chart health care spending in the United States by year, it would be a line that seems to rise and rise and rise. On Friday, dozens of Sag Harbor community members and a panel of local experts in the health insurance field rose to the occasion when challenged with questions about short and long-term solutions to the problems at hand.

The latest installment in The Sag Harbor Express “Express Sessions,” held at the American Hotel, explored the complex issues surrounding health care and health insurance.

“The challenges that we face are very difficult. There’s no straight line in terms of our costs versus the insurance costs,” said Robert Chaloner, the chief administrator of Stony Brook Southampton Hospital. “Clearly costs for health care in this country are going up. When I started my career 35 years ago, health care consumed about 10 percent of the gross national product. We’re up to about 20 percent and rising dramatically.”

Stony Brook Southampton Hospital Chief Administrative Officer Robert Chaloner. Michael Heller photo

He pointed to factors such as advancements in technology that are more expensive to use, an aging population that uses more health care than previous generations and what he called “the human side” — hiring, training and retaining doctors, nurses, technicians and others. Then there’s also staffing the emergency room, operating room and other areas of the hospital appropriately.

“The biggest challenge we face in terms of cost is the human side,” Mr. Chaloner said. “Sixty-five percent of our costs are associated with the people. These are people who require a tremendous amount of education and training and who have an expectation of earning a certain amount of money. We have to figure out how to keep them in this very, very high-cost area that we live in.”

Karl Washwick, president and owner of the Riverhead-based Washwick Agency, recalls a time when premiums were $300 a month. Now, health care can cost a family as much as $30,000 out-of-pocket per year.

Karl Washwick. Michael Heller photo

“[That] is unaffordable for people. What do you do? Do you subsidize it? That doesn’t make it less expensive,” Mr. Washwick said. “You have to find some way to bring the costs down. I’d like to get the third-party people out of there. Let me deal directly with the doctor. … How much is this visit going to cost? More transparency — I think that’s the only way to bring the costs down.”

Asked about trends in patient needs and concerns, Erica Gerrity, the revenue cycle director at Peconic Bay Medical Center, said she is seeing people who don’t understand what their plans cover or what they’re entitled to. She compared it to a shopping trip; people go into a store knowing what they want, but they go to a doctor not necessarily knowing what health condition may be discovered.

“It’s a lot of self-service on the part of the patient,” she said. “The cost is going up and the expectation of the patient is also going up. Anything a patient can do to help themselves is really the key to the future.”

Erica Gerrity. Michael Heller photo

Ms. Gerrity also said she is seeing people without health insurance avoid going to the doctor, especially for preventive medicine.

“It’s a bigger hardship for them, but there are a lot of things available for people who don’t have health insurance,” she said, such as health savings accounts and discount programs offered by pharmaceutical companies.

Kevin Luss of The Luss Group in Southampton said one trend he has been advising clients on is catastrophic insurance, or low-premium, high-deductible plans that only cover major medical events. Some months you’ll only pay your premium, he said, while other months you’ll pay your premium and out-of-pocket costs if you see a doctor not covered under the “catastrophic” category.

Kevin Luss. Michael Heller photo

“It is the single-best way I know to minimize the fixed costs,” Mr. Luss said. “The premium you must pay every month and you increase your variable costs, those that you pay if you immediately need health care. You hold onto your money. Most people don’t incur as much health care in a year as your premium might cost. You might feel better paying into your deductible because you’re only paying at that time when you’re actually sick. … For a healthy couple, it’s not as big of a risk.”

He later added, “Many people pair these high-deductible health plans with tax advantaged Health Savings Accounts, or HSAs, which are funded with tax deductible dollars and used to help pay potentially higher health care costs.”

Anthony Cardona. Michael Heller photo

Asked whether he sees any positive trends in the industry at all, Anthony Cardona of the Water Mill company Cardona & Company said, flat-out, “no.” He explained the three ways people in the United States foot the bill for the $3.3 billion health insurance industry: premiums, the way most people do it; taxes, for systems like Medicare and Medicaid; and out-of-pocket.

“Do you definitely want to pay more in premiums or do you want to take more of the costs on as best as the plans allow? You have two decisions once you choose your network,” Mr. Cardona said. “Definitely pay the insurance company or maybe pay the doctor and the insurance company a smaller amount over the course of the year. I think anyone would agree at this table — it’s a broken system as it stands. Getting creative with what we have is all we have to do.”

No discussion of health insurance would be complete without covering the Affordable Care Act, nicknamed Obamacare, which has been said to have expanded access to health insurance for as many as 24 million people in the United States.

New York State Assemblyman Fred W. Thiele Jr. Michael Heller photo

“Four years after the Affordable Care Act (ACA) has been fully implemented, with its warts and all, the issue in this year’s election is ‘Don’t take away our health care, we want preexisting conditions, we want access to health care,’” said New York State Assemblyman Fred W. Thiele Jr. “If you voted to repeal the ACA, those are the politicians who are playing defense this year.”

The ACA has its ups and downs, the panelists agreed.

“There are parts that helped the consumer. Even though some people were confused, there was some degree of transparency,” Mr. Cardona said. “A few years ago, not that many before the ACA, different companies would provide you with different benefits inside the plan. One of the things the ACA did do was streamline a lot of the benefits inside the plans so it wasn’t so different from carrier to carrier.”

Ms. Gerrity added, “From my end, they’re paying us less, but they’re getting treated, and that’s what health care is about.”

Mr. Chaloner said the hospital is seeing fewer and fewer uninsured people. “Maybe now we are arguing over deductibles,” he said.

Still, there is a percentage of people who are uninsured — about 5 percent of the population. About 75 percent of people have some type of government insurance, such as Medicare, Medicaid or veterans’ programs, and about 20 percent have private insurance, Mr. Chaloner said.

“We continue to struggle to make sure we get insurance for everyone,” he said. “It’s a shame that we are the only industrialized country that doesn’t offer it to everyone.”

But whether “Medicare for all” — or one standard single-payer system — is the answer is not clear, either.

“We’re struggling with that question as an industry,” Mr. Chaloner said. “Right now the New York State Hospital Association is not in favor of a Medicare-for-all plan.”

There needs to be some level of competition in the market, he said.

“The dirty secret is that we the providers are billing more and more and more, and collecting more and more and more, because Medicaid has been flat and declining in New York State so has Medicare,” Mr. Chaloner said. “We used to be able to break even on Medicare and lose Medicaid. The only place we make money at this point is the private insurance. What we’re afraid of — at Medicare or Medicaid rates — you will see every single hospital go out of business.”

VIDEO: Watch the Express Sessions Health Care Conversation here

Ms. Gerrity said she feels similarly.

“Right now Medicare covers medically necessary services only. It’s been proven over and over again that preventive medicine is really saving us money long-term,” she said. “Hospital to hospital, payer to payer, physician to physician is important. It helps consumers make choices. With single-payer, some of the choices people have may go away.”

Mr. Thiele said it’s a hot-button issue politically that started to gain attention in New York when the Trump administration took over in Washington and the repeal of the ACA seemed like a possibility. He said the New York State Senate is divided on the issue, with 31 sponsors of the bill and 32 votes against it.

“It’s something we will continue to look at. The governor hasn’t closed the door on single payer,” said Mr. Thiele, who voted for it when it came before the Assembly. “The future will kind of depend on what happens in the state Senate. … There are issues with doing it on a state-by-state basis. You basically need the permission of the federal government to do it. You need an enormous increase in state taxes, whether a payroll tax or income tax, in order to pay for that. The question is the political will … and the fear of the unknown. My sense of it is that it should be done on the federal level.”

Geraldine Merola, a Sag Harbor parent, asked whether the medical liability insurances inherent in things like car insurance and home insurance would be redundant if universal healthcare were to become a reality.

While some on the panel said ‘no,’ Mr. Cardona said he thought the cost “would be shifted.” “It can’t evaporate into thin air. Who’s going to pay for it now? Maybe your car insurance and home insurance will go down, but our taxes will go up,” he said.

Robert McGovern, a Sag Harbor resident who used to live in the United Kingdom, contrasted his health care experiences living in the two countries. “In my 16 years in the United Kingdom, I have exactly zero paperwork,” he said, but in the United States, he has a four-foot stack of binders of medical paperwork. “There’s got to be a cost buried into that,” he said.

Mr. Chaloner confirmed there is indeed a cost to the paperwork.

“We spend a huge amount of our time working with all the insurance companies, trying to understanding the arcane rules behind their billing,” he said. “I do think we can come up with a system where the billing, record keeping and requirements are standardized across all of the payers. We would be able to reduce some of the costs if I didn’t have to produce a customized bill for everyone.”

Mary Beth Armstrong, a local acupuncturist, asked why there aren’t more insurance companies. Mr. Washwick, who used to sit on the advisory board of the now-defunct insurer Care Connect, offered an example.

“They had to pay 46 percent of their income into the risk pool,” he said. “A risk pool is a fund in the state that covers claims for companies that accept people who are sick already. You can’t stay in business if 46 cents of every dollar you take in goes out the door.”

Mr. Luss said it’s a result of increased regulation of health care via the ACA.

“Increased regulations, increased unfunded mandates and demands on insurance companies reduced the amount of insurance company options we have in this state,” he said. “They simply pull out of the state, or Long Island. They might only sell New York City or upstate or only have a couple of plans here. They go where the money is.”

Mr. Chaloner said people sometimes forget that the United States is a world leader in medical technology in addition to being the most expensive country for health care.

“When you start to see what’s happening with primary care versus all the money we’re putting into end-of-life care, quite frankly, is where you start to see a real problem,” he said. “Other countries are shifting the focus. You may not see the emphasis on the development of fancy cardiac procedures, but you will see a lot more money invested into pre-kindergarten programs. The question is whether we’re willing to shift the dollars.”