Evansville-area employers pay more for health insurance for their employees than do employers in other parts of the nation or the Midwest, according to a new annual survey by the Tri-State Business Group on Health.
And, because most of them pass on at least some of those costs to their employees, Evansville-area workers also pay more for health insurance than do workers in the rest of the nation and region, according to the survey.
But why health insurance is more costly here isn't so clear, according to Lisa Gish, executive director of the business group that conducted the survey.
Some local experts see clues and offer some theories: It may be that people in this area live unhealthy lifestyles that require more health care; or it could also be that we are being charged more for medical services.
Marjorie Soyugenc, president and CEO of the Welborn Foundation and former president and CEO of Welborn Baptist Hospital in Evansville, thinks it's because we use the services more.
"I think it's pretty apparent," she said. "We have high rates of obesity, a high rate of tobacco use and sedentary lifestyles," she said.
These things not only cause us to require more services, they cause more severe illnesses and often more expensive medical procedures, she said.
According to the survey, the average local employer pays about $6,903 per employee per year for health insurance.
That's about 11 percent more than the national average of $6,241 per employee, Gish said.
To offset these higher costs, employees are often required to pay higher premiums.
According to the survey, the average local employee pays a monthly premium of $61 for individual coverage. That's
20 percent higher than the national average of $51 and 13 percent higher than the Midwest average of $54.
For local employees covering families, the average monthly premium is $267. That's 18 percent higher than the national premium of $226 and 33 percent higher than the Midwest average of $201.
The study also found that co-payments for brand drugs are higher in this area than nationally but the same for generic drugs.
Co-payments for preferred brand drugs are $25 locally compared to $22 nationally. Co-payments for nonpreferred brands are $40 locally and $35 nationally. Co-pays for generic drugs are $10 both locally and nationally.
That could indicate local employers are more actively trying to encourage employees to take generic drugs, Gish said.
John Halverson of Human Resource Support, which helped conduct the study, said there are basically two ways higher health care costs could occur.
"Are we being charged more for the service, or are we using that service more than other areas?" Halverson asked.
A growing number of studies back the idea that Tri-Staters' unhealthy lifestyles are the main culprit, according to Becky Malotte, executive director of heart services for Deaconess Health Systems.
"If you look at our community and you compare it to the West Coast and other parts of the country ... they exercise aggressively; they aren't overweight," she said.
Smoking and high-cholesterol foods are also more prevalent in our area than even other parts of Indiana, she said.
Linda White, president and CEO of Deaconess Health Systems, said unhealthy lifestyles have a cumulative affect on the amount of health care an individual needs.
"What this does is lead to chronic conditions at an earlier age," said White. "It's about like a circle, and we have to cut off that circle."
Rick Stivers, chief financial officer at Deaconess, said census material shows that the Evansville area also has an older population, with about 14 percent of its population over age 60 compared to about 12.5 percent nationally. That's another factor that would lead to higher use of medical services.
David Orentlicher, medical doctor, law professor and Indiana state representative, agreed the higher rates of smoking and obesity in Indiana likely are factors. But he believes there are others.
"I think another part of that is that ... managed care has been slower to come into Indiana," Orentlicher said.
Managed care health insurance plans more aggressively negotiate doctors and hospital fees.
"Insurance companies in other states have been more effective in negotiating more favorable rates ...," Orentlicher said.
An additional factor could be what Orentlicher calls "practice patterns." These are the medical techniques doctors use, which for reasons that aren't clear, often vary from community to community, Orentlicher said. It could be that common practices in the Evansville area could be more costly than those elsewhere.
Barbara Clayton, vice president of managed care at St. Mary's Health System, said lifestyle factors, such as smoking and obesity, are contributing to higher health-insurance costs.
Clayton, who recently came to Evansville from Fort Wayne, said information on the prices of medical service is extremely difficult to compare, but the evidence she sees indicates that hospitals and physicians in Evansville charge no more than elsewhere.
"St. Mary's, in particular, has lower charges than similar hospitals around the state," Clayton said. Proprietary information she receives on physician payments also indicates "the fees the physicians accept from payers (in the Evansville area) is very competitive with what I've seen from other parts of the state," Clayton said.
Stivers of Deaconess Health Systems agrees. The price charged for health care by hospitals in the Evansville area is lower than in the rest of Indiana. Last year, Deaconess's prices for health care rose only 4 percent, compared to a 10.5 percent increase in local health insurance charges found in the survey, Stivers noted.
While Evansville area employers now pay more for health insurance than elsewhere, that could change in the future.
Chris Reef, CEO of Welborn Health Plans, said Deaconess Health Systems and St. Mary's Medical Center have invested in technology and efficiencies, and Welborn Clinic has invested in improved electronic medical records. These investments are likely to pay off in coming years with lower costs to consumers.
Stephen Niemeier of Human Resource Support says insurance costs could change as employees use more or less health services. "Experience is the main driver," Niemeier said.
Local employers are already taking several approaches to combat high health care costs, Gish said. For example:
- 35 percent of employers surveyed require employees to pay more for their coverage if their working spouse does not take coverage from their own employer. This, in effect, reduces a company's exposure by reducing the number of people it insures.
- 33 percent have or will have incentives for employees to participate in programs to keep them well.
- 21 percent of employers surveyed said they do or will require employees who insure dependents to pay a greater share of the costs for dependent coverage than single coverage.
- 11 percent of those surveyed plan or now offer a Health Savings Account with high-deductible insurance. The higher the deductible, the less expensive the insurance. Health Savings Accounts also allow employees to save money tax free to cover health expenses.