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Trends in healthcare costs noted in Annuity Board forum

DALLAS (BP)–Representatives from Southern Baptist entities, churches and schools in the Dallas/Fort Worth area attended a May forum sponsored by the Annuity Board of the Southern Baptist Convention to discuss current trends in the health insurance industry.

“The Annuity Board continues to look for ways to control the costs of our medical plans,” said Doug Day, the board’s executive officer of benefit services. “Participants as well as employers are struggling to secure affordable healthcare coverage, and we believe this forum encourages dialogue among regional participants and discussion about creative ways to control escalating costs.”

Leading the discussion was Dennis Bishop of Holmes Murphy and Associates, Inc., a national healthcare consulting company, who said that double-digit increases in premiums are predicted once again for 2003.

The recent announcement by California Public Employees’ Retirement System (CalPERS) of a 25 percent increase for 2003 supports the double-digit forecast. CalPERS is the second-largest purchaser of health care in the nation, second only to the federal government. Smaller providers may experience even higher increases.

“A slight glimmer of hope for upcoming years is that insurance companies are beginning to break even and inflation should start to slow down in two to three years,” Bishop said.

A deterioration of the discounts given to plans by healthcare providers was cited as a major factor in the current escalating costs of healthcare coverage.

“In the past, physicians and hospitals offered better discounts to increase patient flow,” Bishop said. “Today, because of Medicare and managed care cutbacks, as well as legislative changes that add administrative and claim costs, many providers are requesting higher fee schedules and are holding firm to their demands for higher reimbursements.”

The rising costs of hospitals, physicians and prescription drugs are another contributing factor.

While much attention has been given to the sharp increase in the cost of prescription drugs, forum participants learned that the increased cost of hospital care, due in large part to Medicare cutbacks, has far outpaced the inflation of physician services and prescription drugs.

Day told the participants about the initiatives the Annuity Board has implemented to help control the costs of their medical plans in light of these challenges. “We are working to design plans with the flexibility that will allow us to be proactive in a rapidly changing marketplace,” Day said.

“During the past year, we’ve put together a buying consortium with other religious organizations to address and help control pharmacy costs. Working together, we now have more opportunities to receive discounts from pharmacy benefit providers. For the future, we’re looking at using this combined strength to negotiate better rates in other areas of our health care plans,” he said.

Forum participants questioned Day about possible changes in the current medical plans offered and what to expect in rate increases for 2003.

“The Annuity Board is not immune to increasing healthcare costs and anticipates rate increases for 2003 to be comparable to national trends,” Day said. “We evaluate claims experience every 12 months and expect to announce medical plan rates for next year, along with other possible plan changes, after the July 29-30 trustee meeting in Washington, D.C.,” Day said.

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