Despite new law, health insurance costs still rising

Monday, July 24, 2006

JEFFERSON CITY, Mo. -- Desires sometimes conflict with the bottom line for small business owners. Consider Linda Bax, who has desired to offer health insurance at her four-person travel agency but never done so because of the cost.

During the 2004 elections, Bax put her hope in Republican gubernatorial candidate Matt Blunt.

She particularly liked his plan to lower health-care costs through "tort reform," which would impose new limits on the liability lawsuits that she -- and Blunt -- believed were driving up malpractice insurance costs for doctors and thus for health-care consumers.

Blunt won the election. He took office in January 2005 with a Republican-led House and Senate. And one of their first accomplishments was the enactment of the tort reform law, which took effect Aug. 28, 2005.

But after nearly a year under the new law, Bax still is in the same position as when she appeared with then-candidate Blunt at a health-care news conference.

"He's obviously done what he wanted to do in health care, as far as the tort reform," Bax said at her Classic Travel Tours and Tanning business in Jefferson City. "Unfortunately, that hasn't fixed my health-care problem or other small businesses'." The cost of health insurance is still too high to afford, she said.

But the governor's office is encouraging Bax -- and others like her -- to be patient, to persevere in the hope for cheaper health insurance.

"I believe that eventually it will become affordable for her to make such a purchase," Blunt spokesman Spence Jackson said. "The legislation was enacted just a little over a year ago, and I think as it has more time to take effect, we will see some positive changes." For now, health insurance costs continue to rise -- albeit at a slightly slower pace.

The Missouri Chamber of Commerce and Industry collected benefit information as of March on more than 350,000 employees in 500 job titles ranging from entry-level workers to top executives.

The survey found that average health insurance premiums rose by 11.3 percent this past year, compared to 11.8 percent in 2005; 15.7 percent in 2004; 15.8 percent in 2003; and 16.6 percent in 2002.

To try to save money, 38 percent of Missouri companies increased their employees' share of health insurance premiums while 22 percent increased employee deductible levels, the chamber said.

"Employers who have not engaged in cost-saving measures over the past couple of years are the exception, not the rule," said chamber president Dan Mehan.

As insurance costs have risen, so also has the number of people without health insurance.

The U.S. Census Bureau estimated that 707,000 Missourians -- equaling 12.6 percent of the population -- lacked health insurance in 2004, the latest year for which statistics are available. That was up from an 11 percent uninsured rate in 2003 and a low of 6.8 percent in 1999.

The Missouri Foundation for Health expects the number of uninsured Missourians to rise even further, noting that more than 150,000 people have dropped off the government Medicaid rolls from its peak in March 2005 through May 2006, the latest month for which figures are available. Much of that reduction came after Blunt and Republican lawmakers enacted tighter Medicaid eligibility criteria in a budget-cutting move.

Leslie Reed, vice president for health policy at the St. Louis-based foundation, doesn't expect the tort reform law to put much of a dent in the ranks of the uninsured.

"It's probably one of the many pieces that needs to be in place, but I don't think that's going to make a significant change," Reed said.

But the Chamber of Commerce, one of the leading advocates of the lawsuit limits, remains confident they will start driving down health insurance costs. In other states that enacted similar measures, it took several years for better insurance rates to come to fruition, said Michael Grote, the chamber's vice president of governmental affairs and general counsel.

"Change has happened," Grote said, "and it will filter to the pocket book." Still desiring more affordable health insurance, Bax said she now wishes it were easier for small businesses to participate in group health plans, which can get better insurance rates by pooling together their employees.

Blunt signed a new law a little over a week ago that could address that desire. Effective Aug. 28, association health plans can form with as few as 50 members instead of 100. Due to exemptions from existing rate requirements, the law also could make it easier for small businesses to team up with larger ones through association health plans.

Jackson accompanied Blunt on the ceremonial bill signing tour.

"There were a lot of very energetic business owners that came out to show their support for this legislation," Jackson said.

Grote describes the tort reform law as the outer edges of a puzzle and this year's health plan law as one of the inner pieces that -- along with other pieces in the future -- should create a better health insurance picture.

Eventually, he asserted, businesses and their employees will see better health insurance rates, and those savings "will be tremendous." Bax just wishes the wait would be over.

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