Dealing with Rising Health Care Costs

By Scott Culver
Communications Specialist
WEA Trust

June 2001

Did you know that Americans paid, on average, more than four times as much for food and transportation, and over five times as much for shelter in 2000 as we did in 1970? The cost of everything keeps going up it seems, but nothing quite as much as the cost of health insurance.

Over the last 30 years, while the cost of living has increased by about 345% and average teacher salaries by about 330%, the cost of a family health insurance plan has increased by an astounding 1,900%.

The rapid rise of health insurance during this time period has propelled it from a fringe benefit representing less than 5% of the average teacher salary, to a major component of a pay package, representing almost 22% of the average salary. In just 10 more years, it is estimated that health insurance costs will represent about 40% or more of a compensation package.

Health insurance cost increases have led many employers to seek refuge in HMOs and other highly managed plans. Others have resorted to shifting costs to employees through premium sharing and higher deductibles and copayments.

Trust takes different path
We at the WEA Trust have a different notion about how to deal with health care costs effectively. First, we squeeze all the savings we can from our operations, secure discounts from medical providers, and leverage our size to purchase certain supplies such as durable medical equipment in bulk to reduce the price.

But we also look at the other end of the equation. We look for ways to help our members improve their health. It’s an outlook we adopted about five years ago and requires a long-term commitment to our members, according to Trust Executive Director Al Jacobs.

“We believe that if we help our members reduce future risk of contracting an illness or having an accident and if we help control existing chronic diseases by ensuring that members get the proper standards of care, the results will be a healthier population with lower health care costs,’’ Jacobs said.

The Trust’s goal is to help make public education employees the healthiest employees in the state by the end of this decade. While some insurers pay lip service to improving the overall health of their members, the Trust is committed to the long-term well-being of its members.

“We can adhere to this philosophy because our members maintain a long-term commitment to us,” Jacobs said. “Of the 345 groups the Trust insures, 70% have been with us at least 10 years and 50% for 15 years or more. So, unlike other insurers, we can take a long-term view.”

What does it take to make our members healthier?
In looking at how the health care dollar is spent, we found that a small percentage of people will end up using most of the health care dollars. In 1999 for instance, according to a report by the Agency for Health Care Policy and Research, 10% of the U.S. population accounted for 73% of total dollars spent on health care.

Our goal is to have programs and services in place to have an impact on that number. For example, it is widely known that tobacco use and obesity can lead to a variety of health problems. So, we offer programs to help members quit tobacco and manage obesity.

We also recognize the need to help members with chronic conditions manage their ailments more effectively. There are nationally accepted guidelines to manage many chronic conditions but, for one reason or another, individuals do not always receive these treatments.

Dr. Kate Templeton, a full-time medical advisor with the Trust, said the failure to receive these treatments is not necessarily an indictment of physicians. Overworked doctors often can’t afford the necessary time to meet with their patients, and the health care system is not set up to ensure patients receive this information.

The Trust is identifying members who have chronic ailments, such as asthma or heart disease, and educating them about managing their conditions. We provide these members with guidelines established by the National Institutes of Health for treating chronic conditions.

“We want to proactively help members manage their care, anticipate the members’ needs, and follow up on their condition,” Templeton said. “We want our members to understand why they are involved in this program.”

We do not intend these programs to replace the care and advice members receive from their own specialist or primary care physician. We believe the information that we provide will make members wiser consumers of health care and enhance the relationship they have with their physicians.

“The goal is not to interfere with the doctor-patient relationship, but to have the patient interact more efficiently with the health care system,’’ Templeton said.

These programs demonstrate the commitment the Trust has made toward improving the health of its members and reducing the cost of their health care plans.