News & Trends

Commonwealth Fund study on uninsured; more hospitals join the Leapfrog Group study; Milliman report on HMO rates; HSC's study on increased usage of emergency departments by insured patients; Anthem and WellPoint merger





One out of four uninsured Americans in 2001 were either employees of large firms or their dependents, reveals the latest report from The Commonwealth Fund. Companies with 500 or more employees had 32 percent of uninsured workers on their payrolls, up seven points from 1987.

The rate of uninsured workers in large firms increased by over 50 percent from 1987 to 2001. The trend was gradual but steady over the five-year period, suggesting that it was neither reliant on the recent state of the U.S. economy nor affected by the impressive cost control impact of managed care in the mid 1990s.

Why so many large-firm employee without insurance? It boils down to whether they work enough hours to qualify for benefits or whether they can even afford their share of premium.

Another double-digit health increase for 2004 won't help matters. Expect a 12.6 percent average increase for employers next year, according to a recent Hewitt study, a slight drop from 2003's 14.7 percent increase. Specific plan projections see companies receiving 2004 cost increases of 13.5 percent for HMOs, 12.5 percent for traditional indemnity plans and 12.0 percent for PPOs and POS plans. (See DataWatch for more details.) Expect employers to institute more cost-shifting techniques — such as increased premiums and copays, and tiered prescription drug plans — to ease their sore wallets.

Four in 10 Americans (68 million) will be obese by 2010 if current trends continue, predict researchers with the Centers for Disease Control and Prevention. Currently, 31 percent of Americans are obese.



More hospitals have jumped on a patient safety bandwagon that's driven by employers. In just one year's time, the number of hospitals submitting survey responses to the Leapfrog Group rose almost 60 percent, from 637 to 1,012. Nearly 80 percent of consumers nationwide now have access to patient safety data on at least one hospital in their area.

The Leapfrog Group actively works with hospitals in 22 regions to gain their participation in a patient safety survey. Over one-third of the hospitals responding in the latest survey actually fall outside the rollout areas, demonstrating the growing influence of the health care purchaser-driven effort.

Nearly 40 percent of all regional rollout hospitals have implemented at least one of Leapfrog's recommended patient safety practices, but only 4.1 percent have fully implemented Computerized Physician Order Entry. Twenty-two percent have fully implemented ICU physician staffing with intensivists. Click here for our three-part article on Leapfrog's standards.

Medical injuries in hospitals cause over 32,000 deaths each year, as well as 2.4 million extra inpatient days and $9.3 billion in extra charges for longer stays and more care, according to a new study published in the Journal of the American Medical Association.



The good news is that HMO rate increases for 2003 weren't as big as in 2002. According to the latest Milliman USA report, 2003 premium rates were 11 to 16 percent higher than 2002 rates, down from 16 to 22 percent increases reported last year. The bad news is that renewal rates for 2004 are expected to average 15 percent higher.

To battle the upcoming increases, Milliman expects employers to continue shifting costs through higher copayments and larger premium contributions. Fifty-eight percent of HMOs surveyed have either implemented a consumer-driven approach or will implement one within the next year. Beyond cost shifting, HMOs are also expending efforts on consumer education. Of the survey respondents, 36 percent currently offer their members information on available treatment options. Another 26 percent are currently designing this service or will make it available within a year.

Increases varied greatly by region with the Mountain states seeing the largest per-member hike for 2003 at 19 percent. The lowest premiums in the country are still in the Pacific region ($205 per member), while the highest rates were in the East North Central ($254 per member). Next year, New England's predicted to see the largest increase with premiums rising 15.7 percent for groups with more than 50 employees. Smallest expected increases? That'd be in the West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota) with an anticipated 12.9 percent increase.

Eighty percent of American workers choose or expect to choose generic drugs when available, reveals a new report from Fidelity Investments. The study also revealed a number of lifestyle changes employees are trying to make in order to reduce health care needs and costs, including improving their diets (47 percent), routine screenings (37 percent), losing weight (34 percent) and exercising regularly (30 percent).



Visits to hospital emergency departments increased roughly 16 percent between 1996-97 and 2000-01, reports the Center for Studying Health System Change. HSC says the increase itself is not surprising in light of population growth and increased usage across the entire health care system, but the primary source of the increase comes as a shock.

Flying in the face of conventional wisdom, the privately insured are filling up ER departments across the country. While visits increased 10 percent for Medicare beneficiaries and uninsured patients alike, they shot up 24 percent for the privately insured. None of the increase could be attributed to urgent situations. In fact, fewer than half of ER patients are classified as actually needing care within an hour of their arrival.

Why are there so many more visits by the insured? HSC notes an overall trend toward ambulatory care. Senior Health Researcher and study co-author Peter Cunningham, PhD, adds: "Emergency departments are open 24 hours a day, seven days a week — no appointment needed. If patients can't get in to see their doctor, they may view emergency departments as more convenient sources of primary care than their regular physicians."

Besides the convenience factor, the HSC suggests that physicians may be helping to "push" patients towards the ED as a form of "defensive" medicine. In the case of potentially risky patients or risky procedures, to avoid any chance of malpractice, a physician will simply refer a patient to the ED.

Roughly three in 10 employees come to work too stressed or distracted to be effective five or more days a year, says the latest Compsych StressPulse survey. That's a 10 percent increase over the same poll conducted six months earlier. The main source of stress? Lack of job security, which showed a 13 percent increase from the previous poll.



An agreed merger between Anthem Inc. and WellPoint Health Networks would create the nation's largest health insurer. The new company, to be called WellPoint Inc., will serve 26 million members and operate as a Blue Cross or Blue Cross Blue Shield licensee in 13 states (with WellPoint Inc claiming the No. 1 market share spot in 12 states). That sets the merged company as the largest in the nation, overtaking UnitedHealth Group.

Pioneers in creating profitable companies from Blue Cross plans, the new company will compete with United for large national employers, but WellPoint Inc also plans to go after small businesses and the uninsured by creating lower-cost policies that rely on cost-shifting to employees.

Increasing premiums faster than the medical services inflation rate, Anthem, WellPoint and UnitedHealth have been big winners on Wall Street in recent years. Immediately after the merger's announcement, WellPoint's chief executive Leonard Schaeffer's WellPoint holdings increased by over $70 million, bumping the total to over $300 million. He'll also earn nearly $28 million in a change-of-control clause in his contract, plus another $10 million in retirement benefits.

Almost two-thirds of Americans would prefer a government-run health care system that covers everyone as opposed to the current employer-based system, says a recent ABC News-Washington Post poll. Fifty-four percent of Americans are dissatisfied with the overall quality of the current system.


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Business and Health

Nov. 7, 2003;21.