Health Insurance sticker shock hits consumers

by Lesley Politi on December 4, 2008

Health insurance sticker shock hits consumers

Health insurance sticker shock overcame Mickey Trznadel when he opened an envelope from Blue Cross and Blue Shield of Illinois earlier this year, soon after turning 55.

Monthly premiums for his individual medical policy, with a $1,000 deductible, were being lifted to $665.50 from $433.50 previously — a whopping 53.5 percent increase.

Trznadel, who cobbles together a living of about $25,000 a year as a landscaper, home painter and snow removal worker, says he looked at the letter and started yelling.

Eventually, after repeated phone calls, Blue Cross and Blue Shield officials offered him a deal: Raise the deductible to $2,500 and the monthly premium would drop to $501.78. Trznadel took the offer.

Finding another private insurance policy isn’t an option for this Brookfield man, who lives with his 85-year-old mother, Wanda, because that’s the only way they can make ends meet.

He has diabetes, high blood pressure and a history of non-Hodgkins lymphoma. She’s had two pulmonary embolisms and breast cancer but works full time in a junior high cafeteria to help pay the bills.

Trznadel contacted me earlier this year when he was trying to launch a one-man health reform effort, a petition drive aimed at instituting a price freeze on doctors, hospitals, drug companies, health insurance companies and lawyers.

I was one of many public figures who’ve heard from this frustrated man over the years as he’s complained loudly about the rising health care costs.

In truth, he’s got a point.

In 1976, when Trznadel first signed up with Blue Cross and Blue Shield, his monthly premium was $17.28, according to the insurer, which confirmed coverage details after Trznadel signed multiple release forms.

Today, those premiums are $501.78 for a policy with a much higher deductible – a jump of 2,800 percent over 32 years.

That increase is in step with the rising cost of medical care, said Blue Cross and Blue Shield spokeswoman Mary Ann Schultz. “Since 1976, medical costs have grown by 2,780 percent (over the span of 32 years, an average of 8 percent a year for medical inflation and 4 percent a year for increases in utilization due to age),” she explained in a statement.

The older people get, the more medical services they use, and premiums reflect that reality, she continued. Also, the insurer assumes that with each consecutive year, the medical services consumed by a policyholder (and thus the number of claims filed) will increase 3 percent.

“The average 40-year-old this year will actually make 3 percent more claims than the average 40-year-old did last year,” Schultz wrote.

In fact, Trznadel has gotten good value for his premium dollars, she asserted. According to Blue Cross and Blue Shield’s records, he’s paid $73,212 to the company since 1988 and the insurer has reimbursed medical providers $83,157.22 for his claims.

Trznadel doesn’t see it that way. Outside of what he’s shelled out for health insurance, he’s paid tens of thousands of dollars out of his own pocket for expenses insurance doesn’t cover.

Also, Trznadel increasingly is going without care, even with insurance. Today he doesn’t test his blood sugar levels, something all diabetics are supposed to do, because the testing strips cost too much. Also, he’s put off going to the oncologist for years because his cancer has been in remission.

The very big picture is that what’s happened to Trznadel – and what’s happening to people across the country – isn’t sustainable. With incomes stagnating and the economy faltering, health care costs can’t continue to climb at this rate without becoming unaffordable.

As it stands, some experts are warning that consumers may be nearing the limit of what they can shoulder in the way of higher out-of-pocket costs, including deductibles and co-payments for medical services. If that’s the case, a primary strategy for constraining premium increases will no longer be available.

This is what people like Trznadel are waiting to hear from the new Congress and the incoming Obama administration in Washington: What will you do to help people like me, people who are barely able to keep medical coverage today and who can’t pay for medical cost increases tomorrow?



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