Cost of Health Reform Worries Pittsburgh Employers

Article excerpt

As Pennsylvania and other states prepare this month to put into effect the first requirements of the nation's health-care bill, debate over its merits continues.

Shortly after Congress passed health-care legislation in March, some of Pittsburgh's best-known employers expressed a common concern: The bill will increase what they pay in employee health- care benefits. Hospitals, other providers and consumers worry about the price they might pay, too.

"Whether it's a premium increase, a claims increase, or an administrative fee increase, (employers) overwhelmingly believe this bill will increase their costs," said Christine Whipple, executive director of the Pittsburgh Business Group on Health, whose members include Alcoa, Giant Eagle and PPG Industries.

On the flip side, most of the group's 60 employer-members believe the bill addresses the issue of expanding access to health care and eliminating barriers to coverage. The Obama administration said that was its goal in crafting the Patient Protection and Affordable Care Act. The 10-year, $938 billion bill intends to bring health insurance to more than 30 million Americans.

"You're going to have peace of mind of getting a pretty good policy at a pretty affordable price," said Bill Vaughan of Consumers Union, the nonprofit publisher of Consumers Report.

Supporters praise the bill's key changes, such as prohibiting coverage denials based on pre-existing conditions, limiting patients' costs and investing in preventive care. Critics charge it doesn't address the rising costs of medical care, lower payments to hospitals and the shortage of primary-care doctors.

The dual expressions of concern and hope reveal a reality that comes with overhauling the system: Someone must pay.

A recent Congressional Budget Office analysis projects the bill's price tag will be at least $115 billion more than it was when Congress acted.

Costly proposition

Health-care expenditures in the United States surpassed $2.3 trillion in 2008, accounting for 16.2 percent of the nation's gross domestic product.

Rising medical costs and other forces will hike premiums for people with private health insurance coverage, said Michael Weinstein, spokesman for Highmark Inc., the region's dominant insurer.

The bill will force hospitals -- faced with more patients who pay less -- to negotiate higher prices with insurers, Weinstein said. "It's an unsustainable cycle that health-care reform really doesn't address."

The Hospital and Healthsystem Association of Pennsylvania said hospitals are preparing for payment cuts of up to $10 billion over the next decade. "Hospitals are going to have to do more with less, but that doesn't transform into less quality," said Michael P. Strazzella, the group's vice president of federal relations.

Cost controls ahead?

Economists say it could be years before lawmakers address cost control. Uwe Reinhardt, who teaches health-care economics at Princeton University, said any proposals to contain costs will ignite political skirmishes.

"The American people are just like teenagers -- they are not ready for cost control," said Reinhardt, a professor of political economy, economics and public affairs. "No one wants to give up anything. The American people want more and more and more, and they don't want to pay for it."

About the health-care bill

The health-care bill Democrats passed in March requires most Americans to buy insurance coverage starting in 2014. States will create exchanges, or marketplaces, for people to shop for plans. Until then, states this month establish high-risk pools for people with pre-existing conditions.

Pennsylvania Gov. Ed Rendell in May ordered creation of a health- care advisory committee.

A timeline of the bill's highlights:


Temporary insurance pools will provide coverage to uninsured people with pre-existing conditions. …