Understanding the healthcare cost crisis
AFT pushes for money-saving alternatives at the
bargaining table

The rising cost of healthcare has sparked a negotiations epidemic: Employers clamoring for health benefits concessions at the bargaining table.

Increases in employee premiums and co-pays for both doctor visits and prescription drugs are among the management proposals that AFT Public Employees negotiators meet with resistance—and for good reasons that go beyond the dollar value of employees’ total compensation.

Working with AFT’s research and information services department, many AFT locals are prodding management to look at the inefficiencies in their health plans that are precipitating the increases.

Obvious factors driving costs up include: expanding technology in the prescription drug field; cost-shifting due to uninsured healthcare expenses and below-market Medicare and Medicaid reimbursement rates; and hospital errors that require rehospitalization for the same illness or for an illness a patient contracts in the hospital, says John Abraham, deputy director of AFT’s research and information services department.

One not-so-obvious cause, however, is the “medical arms race.”

Abraham explains: “If one hospital builds a cancer center, they all have to build one because they want to maintain or increase their market share. When hospitals compete in this fashion, the costs for all services go up and consumers and employers are left holding the bag.”

The Center for Studying Health System Change (HSC) released a report in August spotlighting another factor driving up costs—the growing trend in healthcare to focus on lucrative specialties, including cancer treatment, orthopedics and cardiac care.

Among the study’s findings is that hospitals and physicians are competing for profitable specialty services, and that physicians are providing an increasing number of diagnostic and surgical services in their offices.

According to HSC, “the capacity expansions are destined to lead to higher rates of care use and costs.”

The AFT has joined forces with more than 170 organizations and companies to initiate improvements in the safety, quality and affordability of healthcare.

The joint initiative is through The Leapfrog Group (www.leapfrog.com). Abraham says the group’s recommendations to improve care and save money include:

• Requiring physicians to use computer drug order entry systems, which would eliminate questions about what drug has been prescribed. The software also would detect dosage errors as well as conflicts among drugs prescribed by different doctors.
• Referring patients to high volume, high outcome hospitals for certain surgeries and conditions.
• Staffing intensive care units with intensivists—doctors who have special training in critical care medicine.

Experts estimate that about 30 percent of all healthcare expenses are spent on inefficient or ineffective services.

“We just can’t sit back and let this epidemic happen and say we need a federal [universal healthcare] law,” says Abraham. “We have to take the best medical information that is available on how to treat diseases in each class and see if those protocols are being implemented for AFT members around the country. Where they aren’t, we have to press health plans to put them in place.”

Premium padding
Report quantifies cost to workers with health insurance for those without it

Families USA is the first organization to quantify the cost shift for uninsured care to those with employer-provided insurance. According to Paying a Premium: The Added Cost of Care for the Uninsured, released this summer, two-thirds of the cost for unpaid healthcare expenses incurred by more than 46 million uninsured Americans is paid by people with insurance through higher premiums.

That amounted to a $922 average increase in premiums in 2005 for employer-
provided family health insurance and an extra $341 for individual coverage.

“The large and increasing number of uninsured Americans is no longer simply an altruistic concern on behalf of those without health coverage but a matter of self-interest for everyone,” executive director of Families USA Ron Pollack said in a statement. “The stakes are high both for businesses and workers who do have health insurance because they bear the brunt of costs for the uninsured.”

Paying a Premium is available at www.familiesusa.org or www.aflcio.org.