Health insurance costs soar

Medical costs are rising at a rate of faster than the economy, with eight to 12 per cent increases annually over the past four years.

Speaking at the Cayman Islands Society of Human Resource Professionals membership luncheon Friday, Cayman Insurance Centre’s Manager Sales and Marketing Jennifer Williams said the increases were unsustainable for many people and businesses.

‘You have more Americans than ever before entering bankruptcy because of health issues,’ Ms Williams said, noting that approximately 2 million people in the United States file for bankruptcy annually because of unpaid medical debts. Many of those people actually had health insurance.

Rising costs of medical care and inadequate health insurance has become a major campaign issue for the upcoming US election.

The American figures are pertinent to Cayman because one of the elements used in pricing health insurance premiums here is medical costs in the United States, Ms Williams said. In addition, about 50 per cent of the total spent on health care for Cayman residents is spent in the US.

The rising costs of medical care are putting increased pressure on businesses, government, insurers, health-care providers and individuals. Containing those rising costs is therefore a shared concern, Ms Williams said.

Because of its small size, remote location and other factors, the Cayman Islands faces unique pricing challenges when it comes to health care, including: the cost of doing business here; air ambulance expenses; the relatively small number of healthcare providers; and a small risk pool to bear the cost burden.

However, there are things all the stakeholders can do to help counter the various medical cost inflators, Ms Williams explained, starting with the way they use health care.

Some of the factors driving up medical costs include new – and more expensive – treatments, prescription drugs and diagnostic technology. This is seen as a good thing as long as it is not over-used.

‘Responsible consumption is one of the ways to counter overuse of health care,’ she said, noting that unnecessary or fraudulent use drives up costs for everyone.

Being responsible means several other things as well, including practicing defensive medicine and taking the time to learn about any medical conditions that may arise.

‘A lot of people go to the doctor and leave without even knowing their diagnosis,’ Ms Williams said, adding that it is a patient’s right to ask their doctor questions about their condition.

Even though there are a relatively small number of healthcare providers in Cayman, Ms Williams encouraged ‘consumerism’ and shopping around if possible when it comes to medical care.

The non-disclosure of medical history to insurance companies and doctors can also cause increased health care costs.

Because a large portion of the Cayman Islands population is transient, medical histories are more of a challenge here. But even if an insured commits inadvertent fraud when it comes to things like pre-existing or excluded conditions, insurance companies could rescind a policy back to the beginning.

‘As HR managers, you need to make the case to them that they have to report their medical history and they have to take this part very seriously,’ she said.

Healthcare providers can also help contain costs by keeping down the number of errors they make.

‘It is estimated that 100,000 patients die each year due to medical errors,’ Ms Williams said, noting that medical errors take place in treatment, diagnosis and drug interactions.

Insurers can do their part by being accurate in their underwriting and by offering products that balance people’s needs and wants with costs. Insurers can also steer customers to provider networks and generic drugs as another way of controlling costs.

Ms Williams said that often the primary focus in the healthcare system is on acute care, meaning that when people have a particular health problem, they go to the doctor and are treated for that problem only.

She said a more holistic approach is needed.

‘There is a lack of integrated care,’ she said, noting that chronic conditions often go unmanaged.

‘Twenty per cent of the population is driving 80 per cent of the overall health care costs,’ she said, adding that those costs are often related to chronic disease.

Ms Williams also spoke about ways the government could help out, particularly when it comes to providing a safe environment, which could be anything from minimising pollution to installing bicycle lanes.

Governments could also offer cost incentives for things like healthy foods, Ms Williams said, noting that someone had recently said to her that eating healthfully was a luxury because of the high costs of fresh fruits and vegetables here.

Other jurisdictions, like New York City for example, have moved to improve the access people in lower income neighbourhoods have to buying fruits and vegetables.

Ms. Williams said employers can help out by offering wellness programmes.

‘There is an annual return on investment of $6 saved for every dollar spent on employee wellness programmes,’ she said.

Last year, one business actually saw a rate reduction – the first Ms Williams had ever seen – because a company very vigorously participated in wellness programmes.