Navigating the Challenges of Rising Health Insurance Costs
As a family physician and the majority owner of a small medical practice, I strive to deliver exceptional care for my patients while also providing comprehensive health insurance for my employees. However, the escalating costs of health insurance and the inadequacy of certain solutions intended to address these expenses have made balancing these priorities increasingly difficult.
My small business faces unique challenges that set it apart from other industries. While raising prices might seem like a logical response to rising costs, our revenue is capped by what insurance companies are willing to reimburse for services. Consequently, when operating expenses increase, we face three options: accept lower profits, see more patients, or reduce costs. Unfortunately, none of these solutions is straightforward or ideal.
The Limited Choices for Small Practices
Adding more patients to our schedule is difficult due to our existing waiting list and the need to hire additional providers. Accepting lower profits is also challenging, as we’re committed to offering competitive wages and annual raises to attract and retain talent. Reducing costs would likely mean scaling back employee benefits—including health insurance—which would compromise our ability to support our 16 employees.
With limited solutions available, small businesses like mine need support to manage rising health insurance costs. To make coverage more affordable, policymakers must address skyrocketing premiums, eliminate excessive facility fees, and improve hospital price transparency regulations.
The Impact of Rising Premiums on Small Practices
Our practice’s struggle is exacerbated by a lack of competition among private insurance carriers in rural Colorado. In 2019, we spent just over $50,000 on premiums, HSA contributions, and supplemental insurance for staff. By 2023, this amount had surged to over $86,000—a staggering 72% increase. While cost increases are inevitable, this rate of growth is unsustainable. Eventually, we’ll face a tough decision: reduce salaries or eliminate benefits, both of which would undermine our mission to deliver top-quality care.
Facility Fees: A Hidden Driver of High Costs
Facility fees are a significant factor contributing to high health care costs. As an independent practice, we can’t charge these fees, but they remain unavoidable for many patients. For example, I perform colonoscopies at the nearest hospital due to the lack of outpatient alternatives in our rural area. While Medicare reimburses $300–$500 for my professional services, patients often receive bills ranging from $3,000–$4,000 before insurance adjustments. These fees cover necessary hospital expenses but burden patients significantly.
Fifteen years ago, outpatient settings provided these services at lower costs, benefiting patients. However, payers like Medicare and private insurance reduced reimbursements for outpatient endoscopy, driving these procedures to more expensive hospital facilities. To combat this, lawmakers in Colorado have proposed capping facility fees, a step that could help alleviate these costs.
Transparency as a Solution
Improving price transparency is another strategy to address health care expenses. Currently, some of my patients cancel life-saving procedures like colonoscopies due to high estimated bills. Even though screenings are covered under the Affordable Care Act, hospitals often provide the highest potential cost estimates, deterring patients from proceeding.
Colorado’s new price comparison tool offers hope by helping patients understand procedure costs more clearly. If successful, other states could adopt similar tools to reduce confusion and ensure patients receive necessary care without financial fear.
Time Is Running Out for Small Businesses
A 2024 Small Business Majority poll highlights the impact of rising health care costs. Employers facing increased expenses have responded by raising employee contributions, switching to plans with limited coverage, or cutting benefits. Alarmingly, nearly a quarter have dropped coverage altogether, affecting employee morale and retention.
Policymakers must act decisively to address these issues. Despite the rising costs, there’s little evidence that health outcomes or patient satisfaction have improved. If our health care spending doesn’t demonstrably enhance community health, it’s time to overhaul the system—not just for small practices, but for all Americans.
For more insights on advocating for affordable health care, visit StanfordPhysicianAdvocate.org.
Source: Small Business Majority for detailed findings on health care costs.