Around this time every year, the all-volunteer staff committee of Unitarian Universalist Society: East in Manchester sits down with a broker to select a health insurance plan for employees for the coming financial year.
Only three of the church’s six employees participate in the plan, but it costs about 10% of the association’s $500,000 annual budget. And each year, their carriers’ rates have increased – often by double-digit percentages.
“There was simply no way for the church to absorb that kind of increase in a premium,” committee chairwoman Vivian Carlson said, recalling a recent year when the UUS carrier: E was about to raise fares by 25%. Reluctantly, the church has changed carriers and increased the deductible several times over the past few years, which allowed it to meet budget constraints, but created confusion and higher costs for church members. staff.
Many Connecticut small businesses and nonprofits face a similar conundrum, weighing their company’s creditworthiness against how generous they’d like to be with employee health benefits.
“We hear every day from employers saying that providing health care to their employees is either the #1 or #2 expense they have, and if it continues at this rate, they won’t be able to settle here and provide good quality insurance and attract employees,” said Vicki Veltri, State Director Health Strategy Office.
As health care benefits gobble up more of their budgets, small businesses and nonprofits are forced to compromise. UUS:E has delayed hiring a part-time membership coordinator, a position Reverend Joshua Pawelek said would help the church congregation increase its fundraising base. Instead, the church must spend those dollars on insurance premiums.
“We don’t have a big endowment. We get our money from church members,” Pawelek said. “They’re very generous, but if we have to add an extra six thousand dollars every year for health insurance, it makes it difficult to do anything else,” he said.
Why so expensive?
Health insurance premiums are rising largely because health care costs are rising. Over the past two decades, the cost of hospital and medical care has increased faster than inflation.
“Carriers are continually looking to bring innovative and more affordable products to market that emphasize value-based care recognizing that affordability is key,” Susan Halpin, executive director of the Connecticut Association of Health Plans, said in comments via email. “To best achieve this goal, the focus must be on how best to reduce the underlying cost of care.” Halpin also said changing state and federal regulatory requirements, such as the Affordable Care Act’s elimination of limits on pre-existing conditions, are contributing to the rate increases.
In 2019, OHS found that hospital and outpatient expenses were major contributors to rising healthcare costs for commercial policyholders. Nationally, hospital care accounted for 31% of all personal health care expenses in 2019, up 6.2% from the previous year, to nearly $1.2 trillion.
Jill McDonald Halsey, spokesperson for the Connecticut Hospital Associationsaid the hospitals support the state’s efforts to limit the annual growth rate of health care spending – an initiative, adopted by decree two years ago, known as the health care cost growth benchmark. She attributed the rising cost of care to several factors, including labor, the pandemic, inflation, and inadequate state and federal payments for patients on Medicare and HUSKY.
“We need to look at the whole system if we are to be successful, including providers, health insurance companies and drug manufacturers,” McDonald Halsey said in emailed comments. “To date, OHS’s analysis has been overly focused and based on incomplete data. If we are to be successful in achieving greater accessibility, OHS will need to broaden its vision to all stakeholders and focus on a more comprehensive list of contributing factors.
The State General Assembly is currently consider legislation this would codify the governor’s executive order on limiting rising health care costs through data transparency. Bill 5042, which passed the House 119-29 last week and awaits a vote in the Senate, requires insurers and providers to make cost and quality data public and directs the OHS to hold public hearings with entities that do not achieve state objectives.
The bill is part of a larger package of legislation, proposed by Governor Ned Lamontaimed at controlling health care costs across the state.
Lamont recently held a press conference at UConn Health in Farmington to urge the Senate to pass HB 5042. Joined by Sen. Matt Lesser, D-Middletown, and Sen. Tony Hwang, R-Fairfield, he told the gathering of doctors and state administrators: “It allows private sector employers at all levels [to] to be able to make the most informed decisions – where you can get the best value, where you can get the best return, and where you can get the highest quality health care.
Senator Matt Lesser, Governor Ned Lamont and Senator Tony Hwang speak in support of Bill 5042 on April 29, 2022 at UConn Health in Farmington, CT.PHOTO COURTESY OF THE GOVERNOR’S OFFICE
University researchers have attributed much of the sharp rise in hospital costs in recent years to poorly functioning markets for hospital services — that is, the consolidation of hospital systems through mergers and acquisitions, which reduces competition.
In Connecticut, the health care field has consolidated significantly, with Hartford HealthCare and Yale New Haven Health regularly earn shares in markets around the state. Another bill proposed this session sought to prohibit anti-competitive practices among hospitals.
Hartford HealthCare is fighting two civil lawsuits for “unfair practices” and “attempted monopolization” of the market. Competitor Saint Francis Hospital and Medical Center sued HHC in Januaryand a consumer group filed a proposed class action lawsuit against the hospital system in February.
Reverend Pawelek of UUS:E is one of the plaintiffs in the second case. In their complaint, he and his fellow plaintiffs alleged: “There is a direct link between rising hospital prices and rising insurance premiums, and…one of the main drivers of higher premiums is consolidation. of the relevant hospital market.
The economic effects of hospital consolidation can be significant.
Research from the RAND Corporation has linked hospital mergers — and the resulting higher prices for hospital care — to lower wages in their local markets. In a 2020 studyRAND’s Daniel Arnold and Christopher Whaley found that hospital mergers between 2010 and 2016 reduced the average salaries of local residents by about 1%.
Connecticut’s attorney general and Office of Health Strategy said they are paying close attention to the issue of hospital consolidation and the impact it can have on the cost of care.
HB 5042 contains some minor adjustments to the authority of the OHS in reviewing and approving proposed mergers; OHS recommended expanding this authority further.
“We need access to affordable, flexible and predictable insurance,” said Andy Markowski, Connecticut director of the National Federation of Independent Businesses. “But before you even get to affordable, flexible and predictable pricing, it has to be in a competitive market.”
When Health Insurance Premiums Rise, Businesses Take Action about half of this increased cost to their employees, said Priyanka Anand, a health economics researcher and associate professor of health administration and policy at George Mason University.
“I kind of see it as a shared burden between employer and employee,” Anand said.
Reduced pay can have a bigger impact on the economy, Anand said. “If you have less money to take home, it’s less for rent, it’s less for food, it’s less for all the other things you spend,” she said. .
Small businesses, which make up 97% of all Connecticut businesses and employ about half of the state’s workforce, often feel a more acute impact from rising health care costs. According to the National Conference of State Legislators, small businesses pay between 8% and 18% more than large companies for the same health insurance policies.
While most workers (56%) benefit from employer-provided insurance plans, small businesses are less likely to provide health benefits.
This is partly because it costs more. According to data from Medical Expenditure Panel Survey.
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The decision whether or not to bear this cost can fundamentally change the way small businesses and nonprofits operate.
State Senator Christine Cohen and her husband own Cohen’s Bagel Co. in Madison. After covering 100% of their employees’ health insurance for many years, they recently decided to eliminate this benefit because it was becoming too expensive.
“It’s a frustration as a business owner — I want to attract talent, I want my people to come work for me and stay with me,” Cohen said.
“Small businesses are out there every day asking for something to stop this,” said Wendy Traub, co-owner of Hemlock Directional Boring Inc. in Torrington, which does contract work to dig tunnels.
With a very small staff, Hemlock used to cover 100% health insurance for all of its employees, but now the company can only afford to cover 70% of premiums – with employees paying the remaining 30%.
“It’s just starting to get unmanageable,” Traub said.