Rerun: Another double digit premium increase. Wal-Mart, can you help me?

The Health Business Blog is taking a break and re-running some posts from 2008. If you’d like to comment, please do so on the original post. What a difference four years makes! My premium is falling for 2012/2013.

It’s that time of year again: when Blue Cross Blue Shield of Massachusetts sends the annual health insurance renewal notice for my boutique health care consulting firm. This year’s increase is 13.3 percent, on top of last year’s 26.3 percent increase and an 11 percent increase the year before. Thanks to the magic of compounding it means the premium has gone up about 60 percent in three years. Health insurance has become a serious burden for us.

There’s not much I can do about it either. The “Alternative Plan Solutions” offered by Blue Cross reduce premiums modestly in exchange for significant cuts in benefits. For example, we could save $147 per month ($1764 per year) by choosing a plan with a $2000 deductible per individual/$4000 per family. That hardly seems worth it since it could end up increasing out of pocket costs and it also means replacing pre-tax premium dollars with after-tax payments toward the deductible. (The plan does not appear to be a true consumer directed plan that could be paired with a Health Savings Account.)

In previous years we’ve reacted to higher premiums by dumbing down the coverage. As a result our office visit co-pays and prescription drug co-pays are high. I recently paid over $100 for the generic version of a covered prescription drug! I’m not inclined to skinny the plan further.

This brings me to a discussion of Wal-Mart. I received a note from Wal-Mart Watch today, taking issue with Wal-Mart’s $4 generic program:

We’d like to take a moment today to applaud two Arkansas state senators for standing up to Wal-Mart. Sen. Percy Malone and Rep. Tracy Pennartz, in a meeting with Wal-Mart’s senior director of health-care policy Joe Quinn, accused the company of “just trying to polish its image” by calling its $4 generics program “real change in health care.” Wal-Mart, long accused of providing stingy benefits for its employees, has been citing its low retail prices as an answer to criticisms of its health care plan.

Rep. Pennartz, for her part, expressed concerns for independent pharmacists across the country, who would face serious difficulties matching Wal-Mart’s low price. Independent businesses are certainly struggling to keep up with Wal-Mart’s pricing, but Pennartz’s concerns reveal a larger point: Wal-Mart’s $4 generics are aren’t an answer to America’s health care problems, they’re a way for Wal-Mart to make more money. Whether that means luring in Medicaid recipients who need cheaper drugs, getting employees to use the company pharmacies for their prescriptions or driving out competing pharmacies, Wal-Mart is only looking out for one thing: itself.

I actually agree with Wal-Mart’s claim that the $4 generic program is true health care reform. If the program is the result of Wal-Mart looking out for itself I say keep it coming! My non-profit health plan and the local non-profit health care systems don’t exactly seem to be solving the health care cost problem despite their public-oriented missions. I hope Wal-Mart keeps ‘looking out for itself’ in the area of health care. If that means applying the same principles to the rest of health care financing and delivery that Wal-Mart’s applied to generics, I’m not going to be upset.

I’m also sympathetic to Wal-Mart when it comes to providing insurance for low-wage workers. A worker making the US minimum wage of $6.55 per hour, working 40 hours per week, 50 weeks per year would make $13,100. By contrast our company’s premium is more than $15,000 per family. And of course that doesn’t count the out-of-pocket payments if someone actually wants to use their insurance.

August 31, 2012

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