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Will 2003 be the year the U.S. health finance system changes forever or just another year when everybody grumbles about how expensive health insurance is?
No one knows what the future holds, but experts do agree on this: Health insurance costs are climbing at double-digit rates for the fourth straight year.
The cost of covering a single employee at a large employer will rise an average of 15% in 2003, to $3,192, says Towers Perrin, New York.
Agents in the field say the picture looks worse to them.
Anne Sperling, employee benefits manager at Daniels Insurance Inc., Santa Fe, N.M., and president of the New Mexico State Association of Health Underwriters, sees increases in her area ranging from 7%, for employers with great claims experience, to more than 50%, for employers with bad claims experience and bad demographics.
Prices "are going to keep going up," Sperling says.
David Prewitt, an independent agent in Bedford, Texas, reports seeing increases of 24% to 34% in the Dallas area for all group sizes.
Years ago, insurers could hold costs for normal small groups down by refusing to sell health coverage to bad risks. These days, because of laws and regulations limiting insurers ability to deny coverage for small groups, "theres not a question of getting insurance," Prewitt says. "Theres a question of affording insurance."
Regulators are likely to use their authority to scrutinize rate increases more carefully, according to Robert Booz, an analyst at Conning Research & Consulting Inc., Hartford.
Getting complete data for 2002 and 2003 will take time, but the Employee Benefit Research Institute, Washington, has detected signs that the rate increases are undermining the commercial health insurance market.
The percentage of U.S. workers receiving health insurance benefits from their employers rose throughout most of the past 10 years, thanks to stable rates in the mid-1990s and a tight labor market in the late 1990s. But the percentage fell to 63% in 2001, from 64% the year before. It is the first such drop since 1993, EBRI says.
"The decline in the percentage of workers with employment-based health benefits occurred primarily within small firms," EBRI observes.
The health insurers that survived the 1990s are starting to generate somewhat higher profits, according to Weiss Ratings Inc., Palm Beach Gardens, Fla. But many of the surviving insurers have taken drastic steps to stay in business. Insurers that have closed major divisions and furloughed workers to get through the bad times are not in a mood to treat agents with elaborate courtesy.
"I get the impression that, if the insurance companies could get rid of the agents, they would," Sperling says. "They really dont like the brokers."
