Richard A. Saltzman, president of Providence Watch Hospital, Inc., would like nothing better than to see his health insurance premiums jump by 20 or 25 percent for 2000. With 31 employees at three locations – 11 of whom receive either single or family health insurance through Blue Cross & Blue Shield’s Healthmate 2000 – Saltzman tracks his health insurance costs closely. When a Blue Cross representative visited him at his store on Reservoir Avenue in Cranston in late November, he was expecting to take a serious hit. Saltzman had been reading about projected increases of at least 20 to 25 percent. He was prepared for it.
But he wasn’t prepared for what he got – a 62 percent jump in single coverage and a 66 percent increase in family coverage.
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Saltzman currently pays $212.27 for single coverage per employee, per month. As of Jan. 1, 2000, the same plan will cost $343.94. Saltzman now pays $499.75 for family coverage per employee, per month. As of Jan. 1, 2000, the same plan will cost $828.50.
Saltzman’s reaction was predictable.
”This has to be a mistake,” he said.
He was told it wasn’t.
He called Blue Cross.
”That’s the price,” he was told.
Brian Jordan, director of legislative affairs at Blue Cross & Blue Shield of Rhode Island, was not totally surprised by Saltzman’s plight.
”It’s probably on the higher end of the spectrum, but we’re seeing some fairly large increases this year,” Jordan said. “That’s not unheard of.”
Jordan points to the rising cost of pharmaceuticals as one of the biggest reasons for the dramatic increase in health insurance premiums. Health insurers like Blue Cross, said Jordan, are as hopeful as anyone that changes can be brought to the overall health care system to bring prices more in line.
”No one enjoys delivering that kind of a rate increase,” he said.
Bob Drouin, a senior insurance analyst in the life and health section of the state Department of Business Regulation, said his office has received “a lot” of inquiries in recent weeks.
Drouin said there is reason to believe that the sharply rising premiums will level off eventually and that the kind of hit being taken by Saltzman will become much more the exception than the rule.
Like United Healthcare has been doing for several years, said Drouin, Blue Cross & Blue Shield of Rhode Island is now putting greater weight on age and gender when setting its small group insurance rates.
“Over the last couple of years, if you had a small group with a higher than average age, you’re being brought into line,” he said. “It’s causing some substantial increases. It’s transitioning to a new system. My belief is that you will not see that kind of increase again.”
Saltzman can’t believe he’s seeing it now. The increase will cost him an additional $23,000 in 2000 for the exact same benefits he received in 1999. His only alternative, he said, is to accept a package with fewer benefits for his employers. But that is something Saltzman is simply not willing to do.
”I’ve basically agreed to pay more,” Saltzman said.
To some degree, Saltzman will have to pass those costs along. But there is only so much he can pass on to employees and his loyal customers.
“I have got to make it so it is palpable to themI’ve done everything I can possibly do,” he said.
If misery loves company, Saltzman appears to have plenty of it.
Saltzman said his telephone has been ringing off the hook for a couple of weeks. Fellow business owners have been calling to share horror stories. At a recent social gathering of business colleagues, Saltzman said that rising health insurance costs dominated the conversation.
At the East Greenwich Chamber of Commerce, Gerry Meyer, its executive director, has a story of his own.
Meyer is the only member of the Chamber’s office staff with health insurance through the organization. He has a family plan for himself and his wife. When renewal came up recently, the quotes from both Blue Cross & Blue Shield and United Healthcare, he said, were staggering.
“It nearly doubled to about $1,000 a month,” Meyer said. “I don’t even know the percentage, but it went from $400-something to $1,000.”
Meyer has instead opted to go with an indemnity carrier, through Pinnacle Financial Group in East Greenwich. Craig Butzbach, president of Pinnacle, said more and more customers are looking for creative ways to insure themselves and their companies or organizations.
“With the Chamber, we are basically going with an indemnity carrier, where he will pay a large deductible,” Butzbach said. “The majority of my clients are picking the high deductible. They’re gambling that they are not going to get really sick, but at $600 to $700 a month, it’s becoming like another mortgage payment for some folks.”
While the soaring health insurance premiums paint an ugly picture in the short-term, there are those in the business community who believe the long-term picture is potentially uglier.
Ted Almon is the president of the Claflin Corp. in East Providence, a distributor of medical equipment and supplies with 152 employees. Almon said the most troubling question is not necessarily the increased rates today, but the deteriorating health of the overall system and the prospect of a rising number of uninsured.
“I think the system is in a death spiral – I think it is going to collapse,” he said. “I think the competitive model has failed. We have to face that fact and deal with it.”
A year ago, Almon said, such an opinion might have been tagged as radical. But now, he believes it is a majority opinion. It is time, he said, for the state to step in and take a hard stand.
Saltzman agrees. He said he doesn’t want to come across as a crybaby. But the situation, he said, needs attention.
“Health insurance never goes down — I understand that,” he said. “But this is at a stage where employees can’t pay for it, employers can not afford the additional cost and no one can afford not to have it. It’s a bad situation.”
For two full days after getting his new rates, Saltzman worked the telephone. He called his local representative, he called Congressional offices, the state Department of Business Regulation and the Attorney General’s office.
”I can’t change the law. I can only voice my opinion to those who do,” he said. “Everybody was sympathetic – but nobody had an answer. And I am looking for an answer.”
The closest thing to good news that Saltzman got was a promise from DBR that his case would be reviewed. In fact, he said, of all the telephone calls he made since learning of the increase, no one was more helpful to him than Drouin.
He hopes DBR will get back to him – and perhaps the increase in his premiums will be adjusted. But there are no promises – no real reason for optimism. Come Jan. 1, 2000, Saltzman will pay his health insurance bill. It is a cost of doing business.
Providence Watch Hospital was established in 1940 and business is good. But Saltzman is concerned about others in the small business community. He worries about small business owners struggling to make ends meet. He wonders if such rising health insurance costs will dampen the entrepreneurial spirit of others.
“If anyone was on the borderline before, they’re going under. They’re going to close their doors,” he said.
Like Saltzman, Meyer made his share of telephone calls, but made little progress. He wonders about the state’s control of the industry – about why things have gotten so out of hand. Meyer would like to go up to the State House and make some noise, but he wonders if someone will listen.
”I can’t figure out how to get a hold of the octopus – what tentacle to grab onto,” he said.
