Health care chief addresses insurance costs

December 02, 2003|by TARA REILLY

Maryland's secretary of Health and Mental Hygiene urged business leaders to take a major role in confronting rising health care costs, saying the business community has the most at stake in keeping costs down since it ends up footing most of the bill.

Nelson Sabatini told members of the Hagerstown-Washington County Chamber of Commerce Monday that "the health care system in the United States, in my opinion, is facing a very serious crisis" because of increased costs, particularly for Medicaid, Medicare and prescription drugs.

The business community "has to be a major player and driver in the debate" over solutions to the problem, he said. He said the business community has thus far been passive in health care issues, even though business is most affected by spiraling costs.


"Health care costs impose an incredible burden on the business community," Sabatini said. For example, the cost of insurance grew by 14 percent for 2003 over 2002, he said.

Sabatini said one major Maryland business recently told him it is spending more for insurance costs than for its day-to-day payroll.

At the same time, the number of uninsured residents is growing faster in Maryland than in any other state except Mississippi, he said.

Also driving health care costs is the rising expense of Medicaid, Sabatini said. Though he described the program as an "afterthought" when Medicare was established in 1965, costs for Medicaid have exceeded the costs of Medicare, Sabatini said. If costs go as high as projected in coming years, he said, states will have no money left for other programs.

The yearly cost of Medicaid in Maryland has reached $4.5 billion, or $800 for every man, woman and child in the state, he said, adding that 150,000 children had been added to the program since 1997.

Dealing with health care costs will require action in several areas, Sabatini said. One is malpractice reform. Although the costs of malpractice insurance in Maryland have not had the impact of those in neighboring Pennsylvania and West Virginia, a cap on lawsuit awards that was softening the blow here is evaporating, he said. He suggested stronger caps on awards in malpractice suits and reining in attorneys' fees for such suits.

A second area to tackle is insurance mandates that force people who buy insurance to pay for more benefits than they need, thereby discouraging people from buying it, he said.

He emphasized the need to restructure what he called an "overly generous" Medicaid program.

Finally, he said, the state needs to find a way to more efficiently deliver care to the disabled and chronically ill. The state spends $100 million to care for about 3,000 people with complex medical needs, he said.

Sabatini warned that if the business community does not become a player in the effort to reform health care insurance and delivery, it will suffer. "Somebody else will solve the problem and it may not be in your best interest," he said.

Payroll taxes of 6 percent for small businesses and 8 percent for large businesses were among the options being considered, he said.

"Business has not been adequately represented" in health care discussions, he said.

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