Facing the Challenges of Health Insurance Costs

The rising cost of health care as interpreted by artist Ted Littleford.

Karl Washwick didn’t have to think for long to come up with an example of what’s wrong with the nation’s health care system.

The longtime owner of the Washwick Agency in Riverhead shared that a client suffering from excruciating stomach pain recently went to the emergency room at a local hospital. Doctors then decided to admit her, keeping her for five days before discharging her with a clean bill of health.

It wasn’t until several weeks later that she received the bad news from her insurance provider: a letter explaining that her condition had been misdiagnosed and, as a result, her five-day stay would not be covered by her plan.

“It was absolutely correct,” Washwick said about the insurance company’s denial.

The problem, he explained, is that his client — like millions of others who visit the nation’s emergency rooms each year — trust medical experts and automatically relinquish control over their health care once they step foot inside a hospital. They rightfully trust doctors to make difficult decisions, rarely thinking to question how much a test or procedure costs, and whether or not it will be covered by their provider.

And even if they ask for such information, most medical centers cannot offer answers because, frankly, there’s no way for them to possibly know under the current system.

“If you go to the dentist and learn you need a root canal … well, there are four or five remedies,” Washwick said. “They can pull the tooth, do a root canal, cap it, give you a partial bridge.

“When you go in with a tummy ache, you can have anything from sepsis to indigestion,” he continued. “Who knows what’s wrong? From a health care consumer standpoint, you have no idea what you need or how much you’ll owe.”

What is known, at least among employers and their employees, is that the cost of health insurance continues to climb by double-digits annually, without fail and with no end in sight. The unwavering increases is primarily due to escalating costs of medical care, starting with the prices of prescription drugs, but also including other aspects of the field, such as diagnostics and laboratory work.

Those steady bumps over the past decade are prompting more owners of small companies, those defined under the Affordable Care Act as employing 100 or fewer workers, to require that their employees absorb more of the hikes, resulting in less take home pay. In turn, more employees are opting for less expensive plans, those that might take a smaller chunk out of their pay weekly checks but larger slices in the form of bigger deductibles when they have to see a doctor or visit the emergency room, according to Anthony Cardona, owner of Cardona and Company in Water Mill.

“I’m seeing more and more of a trend among employers … of them saying, ‘I’m sorry, we cannot contribute anymore,’” Cardona said. “Employers are capping what they give their employees because they cannot cover both the increases and the employee contributions.

“It’s a mess, it’s crazy,” he added.

The average plan for a single individual now costs around $750 a month, and that comes with associated deductibles and copays that could easily end up costing the insured $6,500 or more out of pocket in a given year, depending on how many times they get sick. Family plans can run between $2,200 and $2,800 a month, depending on the type of coverage, Cardona said.

And those amounts could have been even higher if the New York State Department of Financial Services had not significantly lowered health insurers’ requested rates for 2019. In fact, more than a dozen insurance providers in the state had requested rates that, if approved, would have increased the cost of health care for their customers by as much as 24 percent.

In a recent release, New York State Financial Services Superintendent Maria Vullo announced that her office had reduced requested rates on individual plans by 64 percent overall, a move that should save the public $314 million next year, while also cutting small group rate reimbursement requests by 50 percent, saving the owners of small businesses some $279 million over the same span.

The department also notes that, as in previous years, the main driving force behind steadily rising premium rates continues to be underlying medical costs, with drug expenses accounting for the largest share, accounting for roughly 28 percent of the health care pie. Inpatient hospital costs were the second most costly factor, accounting for 19 percent of total costs, while specialist physical services (11.3 percent), diagnostic testing and laboratory work (10 percent) and ambulatory surgery (9 percent) rounding out the top five expenses.

“Despite overall increases in insurance premiums, hospitals in our area receive only a small annual cost of living rate from insurance companies,” said officials from Stony Brook Southampton Hospital in a statement. “Additionally, federal and state subsidies have fallen and flattened, while overall health spending has grown with medical advancements in services and treatments.

“Doctors join hospitals and/or groups to provide better care to their patients via access to technologies and specialties, as well as the ability to negotiate more effectively with managed care companies to help cover basic operating costs.

“Stony Brook Southampton Hospital Emergency Department visits remain consistent over the past few years. We have seen an increase in patients with high-deductible and/or high coinsurance plans. These plans can make people think twice about how or if they will utilize health care services. Our first concern is for our patients’ health and well-being and we are committed to ensuring they receive the medical care they need, including helping them identify subsidy programs.”