Insurance costs tied to habits

By David Irvin

Montgomery Advertiser





Employers in the state will save about $20 million in 2006 thanks to a reduction of payments into the Unemployment Compensation Trust Fund.



Speaking Tuesday at the first of seven economic roundtable events in the state, Gov. Bob Riley told business owners and community leaders that business owners would pay a lower rate into the fund next year because the state's economic recovery had reduced the drain on the fund.



"With this change, Alabama's employees will be able to keep more of what they've worked for, and they can invest it in their businesses and in their employees," Riley said.



The fund is used to pay unemployment compensation benefits for qualified Alabamians separated from work through no fault of their own, the release said.



Alabama employers are paying the highest rate allowed by state law, but the rate fluctuates annually according to the amount of reserves in place.



However, the good news of the day soon was replaced by extended discussions on some of the most challenging business topics.



Experts spoke to area business and government administrators about how they can reduce their health and workers' compensation insurance costs.



Cary Kuhlmann, executive director of the Medical Association of the State of Alabama, spoke about health insurance costs and how Alabama's tremendous health problems lead to high insurance costs here.



Alabama finished worse than the U.S. average in obesity rates and various death rates in the past couple of decades, he showed.



"We are a sick state, and a lot of it is because of our behavior," Kuhlmann said.



Small businesses and municipalities are feeling the painful impact of higher insurance costs.



W.C. Hayes is mayor of Maplesville, a community of about 600. He said his insurance costs have "skyrocketed" this year. Because of a cash crunch in the town's budget, Hayes' 15 employees are bearing a greater portion of their insurance costs now.



"People don't like change," he said.



Kuhlmann agrees. He cited a study by the Kaiser Family Foundation that showed 45 percent of employees are worried about having to pay more for their health insurance.



By comparison, only 24 percent of the employees were worried about not being able to pay their rent or mortgage.



Every year American companies spend incomprehensible amounts of money on health insurance. In 2003, the country, as a whole, came close to spending $1.7 trillion, with the largest chunk going toward hospital care.



Direct pharmaceutical marketing to consumers is driving some of the cost growth, but so is the increasingly elderly population in the nation and something called "defensive medicine," a practice used by doctors to hedge against the possibility of tort claims.



One of the biggest drivers of rising health care costs are behaviors that lead to increased sickness and health care spending. For instance, tobacco use, is a leading contributor to heart disease and cancer, which were the top two killers in Alabama three years ago, Kuhlmann said.