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Critical condition

After a string of single-digit premium rate increases, Rochester’s insurers announced 10 percent hikes for 1999. This year brought no relief.

Now, the news gets worse. In late October, Preferred Care said it would seek an average premium rate increase of 17.5 percent for 2001. Today, Blue Cross Blue Shield of the Rochester Area will submit a request to the state for a hike of more than 18 percent.

These rate requests should leave no doubt that action must be taken to bring soaring health care costs under control.

To be sure, no single remedy exists. Multiple factors are driving up costs, including:

Skyrocketing prescription drug spending. For Blue Choice, drug costs have jumped more than 70 percent over the last four years.

Increasing utilization. The Blues’ health maintenance organization has seen a four-year increase in outpatient costs of nearly 90 percent. And, after a period of low inpatient cost increases, that category has begun to rise more sharply.

Other factors include advances in medical technology, excess hospital capacity and government mandates.

Some of these cost drivers cannot be influenced at the local level. However, the community-and particularly, employers-should not underestimate what can be done here.

The Rochester Health Care Forum offers one avenue for tackling this problem. In addition to examining health system capacity, this effort should target more efficient performance-including opportunities for communitywide collaboration.

The amount spent on graduate medical education locally-which is out of line with other areas across the state-should be examined as well.

Utilization in some ways is the most difficult issue. Without greater consumer accountability, individuals will have little or no incentive to curb their demands on the system or alter unhealthy behavior. The Blues’ three-tier prescription drug plan is a step in the right direction, but much more needs to be done.

The forces driving up health care costs cannot be reined in overnight. But the price of delay should be clear.

12/1/00 (c) 2000 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail rbj@rbj.net.

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