Summit County gets a clearer picture of how health care costs are driving up premiums
August 16, 2018
In Summit County, health insurance premiums have been an expensive problem for a long time. Thanks to transparency requirements from the Affordable Care Act, the county's commissioners got the first good look Tuesday on how Summit residents are spending their health dollars. The data gives a clearer view of how health care costs are driving premiums, and helps lay the groundwork for bringing down costs in the short-term.
The medical cost study was funded by The Summit Foundation with the latest figures coming from 2016. While the data provides insights on claims that came through the All-Payers Claim Database, it does not include information from several large employers with self-funded health plans. That includes claims from the county government, the school district, the towns of Breckenridge and Silverthorne, Breckenridge Grand Vacations and Copper Mountain Resort. A future study will seek voluntary disclosure of that data from these employers to give a clearer picture of Summit as a whole.
Tamara Drangstveit, executive director of the Family & Intercultural Resource Center, presented some surprising conclusions from the data. The first was that Summit premiums in 2019 are expected to see the smallest annual increase since 2015, when co-ops were introduced. That is a sign of improving stability in the health market that has been extremely volatile since the provisions of the ACA came into effect.
However, the data also showed that Summit households at 400 percent of the federal poverty level are spending 30 to 40 percent of their income on medical costs. A family of four with a household income of $102,000 can expect to pay $1,420 per month for a bronze-level health plan. Drangstveit said the families at this income level, which can be considered Summit's "middle class," are being hurt the most when it comes to health costs and need relief the most.
Another finding is that more Summit residents get their health care outside of Summit than inside the county. Only 38 percent of resident claims came from Summit. Denver has the second largest share of claims at 32 percent. Going to Denver to get care actually helps with health care costs, as nearly all medical claims are cheaper in Denver than here. However, 13 percent of claims came from Eagle County, where care is generally more expensive compared to Summit. More expensive claims lead to higher costs overall.
The data also shows that some of the most common major medical procedures in ski country, such as orthopedic surgery, are significantly cheaper in the Denver metro area than in Summit. A knee replacement, for example, can cost $48,000 in Summit while it costs around $25,000 in Denver — an 88 percent difference in cost. Standard knee and lower leg operations, like ligament surgeries or fractures, are around 57 percent more expensive in Summit than Denver. While X-rays and general radiology are significantly cheaper in Summit, MRIs are a whopping 268 percent more expensive here than in Denver. Most of these cost differences are due to a lack of competition and patient volume in the county compared to Denver.
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Drangstveit said that the analyzing group came up with several conclusions on this data. One is that health care and provider costs are the primary driver of high premiums in Summit. Another driver is Summit's costs being tied to the rest of health insurance Region 9, which covers much of the Western Slope's rural areas. Many of these communities lack sufficient health providers, let alone a general hospital like St. Anthony Summit Medical Center.
Mike Conway, Colorado's interim insurance commissioner, said that it was obvious from the data that Summit needs to address the underlying problem of health care costs in order to lower premiums. Because of the impulse to blame something or somebody, the Affordable Care Act is often pointed to as the reason for high costs in Summit, but Conway said it was the wrong approach to take.
"The cost of health care had been a problem long before the ACA," Conway said. "If the ACA gets repealed and replaced, the cost of care problem will still be there. My fear is that by focusing on the ACA we're missing an opportunity to delve into the main issue, which is cost."
Conway said that the long-term legislative fixes to bring costs down are still far out of sight. However, communities like Summit can do things in the short-term to start getting local control of the problem. His primary advice for Summit is to form a united front as consumers with a "community purchasing group" that can even the playing field when it comes to bargaining power.
"When we as consumers segment ourselves, where we break ourselves into smaller and smaller factions, it makes it expensive for everyone," Conway said. "We need to get back to the point where consumers are out there, with one voice, negotiating and bargaining with providers and insurers to drive down costs."
Conway compared the relationship between consumers, insurers and providers to three legs on a stool. When the influence of one or more is outsized, one leg – in this case, the consumers – inevitably suffers and the system is unbalanced. Conway said that the consumers should start organizing to bring more power to the bargaining table rather than as individuals trying to face up to monolithic corporations.
"Insurers and providers are constantly trying to increase their bargaining power, and it is common sense that consumers do the same thing," Conway said. "If consumers are an equal market force, they can drive their own interests in competition with interests of the insurance or health care industry."
Conway pointed out that a hospital like St. Anthony's may see 29 percent profit as an acceptable margin.
"Obviously, hospitals should make a reasonable profit and cover costs, but consumers should ask themselves if a 29 percent profit rate for hospitals is acceptable to them," he said. "If not, Summit's consumers should get together and have a reasonable discussion with providers or insurers about what costs and profits seem reasonable to them."