Tens of thousands of Tristate workers enrolling in health insurance plans for 2002 will be paying much more for coverage — and probably getting less for their money.

        Local employees and employers face 20 percent increases in premiums next year, said Sharron DiMario, executive director of Employer Healthcare Alliance, which represents about 1 million insured individuals at 60 companies based here, including Procter & Gamble., General Electric Aircraft Engines and Kroger.

        “That's way over what people experienced this year,” she said. “The situation is worsening.”

        What's fueling the 2002 increases? Experts point to:

        • An aging population that's more prone to illness.

        • Soaring drug costs.

        • The cyclical nature of health insurance premiums.

        Yet despite the increases, the experts don't expect companies — even smaller ones, which tend to pay higher premiums — to drop coverage. That's because workers expect the benefit. But employees are likely to keep paying more for more-limited services.

        Health insurance costs already are so steep that when Nate DuBose sees new employees arrive at the Blue Ash-based grocery distributor where he works, he wonders how they can afford to pay their coverage.

        The $55 a week that most new hires pay for a family — $15 more than what he pays for single coverage — has to be paralyzing for a family's budget, he said.

        “I don't think these rising rates are fair,” Mr. DuBose said from the parking lot of a credit union where he was cashing his paycheck. “I can't remember the last time I went to a hospital, and

        still I have to pay these high rates. It's going up, and all I can say is it's not fair.”

Graying population

        The first cause of the rates that Mr. DuBose finds so unfair is demographics. The nation and the Tristate are getting older.

        “Something like 80 percent of your lifetime health-care cost will be spent in the last five years of your life,” said Norman Day, president of Sentron Medical Inc., a Blue Ash-based company that identifies medical technologies and invests in the commercialization of those products.

        “Even if no provider raised prices, we will have higher health-care costs in this nation next year because of the aging population,” Mr. Day said.

        Steve Martenet, regional vice president of sales for Anthem Blue Cross and Blue Shield, agreed.

        “As (people) get older, they will use more medical services than they used to,” Mr. Martenet said. “A substantial amount of the premium charge is to pay providers for the cost of care.”

        Anthem, which provides health-care benefits and services for 2.1 million Ohioans employed at about 22,000 employer groups, encourages consumers to be more educated about health-care decisions.

        “We have a number of disease-management programs, preventive programs to help people detect early on and manage early stages of disease,” Mr. Martenet said.

Prescriptions soar

        Anthem also encourages consumers to use generic drugs.

        One of the key factors that a recent Kaiser Family Foundation survey found for higher insurance premiums was the rising price of prescription drugs, where costs increased year-to-year by 15.5 percent.

        That comes as no surprise to 44-year-old Margie Blank, a Covington resident and licensed practical nurse employed at a North ern Kentucky rehabilitation hospital.

        With $800 a month in prescription bills for her medications, Ms. Blank wonders how she is going to make it through this year — let alone next year and the years to come.

        “I have to pay that out of pocket and then wait to see what gets reimbursed,” she said. “It's taking almost all my paycheck. Right now at the end of the month, I'm left with nothing.”

        While she has personal challenges paying for her health care, she says she sees the same problem almost every day at work. Many recuperating patients who enter rehabilitation frequently have to return to the hospital.

        “We have a great dental and vision plan, but the medical plan is not,” Ms. Blank said. “Cost for single coverage is $30 a month, but it's the prescriptions that's the problem.”

Going through cycles

        The third reason for 2002's sharp increases is the way insurance companies manage themselves.

        “Insurance companies let their reserves get to a low point. They increase premiums and essentially overcorrect,” explained Robert A. Connor, an assistant professor of health-care management at the Curtis L. Carlson School of Management at the University of Minnesota.

        “The gracious interpretation is that they've undercharged in times past, and now they are replenishing their reserves,” he said.

        Mr. Connor expects to complete a study of health insurance premiums this year.

        Besides underscoring the cyclical nature of premiums, Mr. Connor's study also shows that if health costs are a problem nationally, the problem is worse in rural America because fewer choices are available. Premiums in some rural areas rose by more than 20 percent in 2001, Mr. Connor said.

Small firms hit hard

        Rising premiums are a concern for all businesses, as they try to juggle the bottom line and the needs of their employees.

        But health insurance costs are particularly a problem for small businesses.

        If this year's round of increases follows the 2000 trend, smaller companies employing three to 199 workers will take the biggest hit. Premiums grew by 12.5 percent for those firms, according to the Kaiser Family Foundation's survey, compared with 10.5 percent for companies of 200 or more workers.

        The higher premiums can impede smaller firms from wooing quality employees, said Aaron Larkins, chief executive of Further Innovations Inc., a Milford-based company founded in 1998 that employs six.

        The company markets Oculus, a type of software that enables firms to compare productivity against financial performance as well as calculate computer and Internet misuse. Further Innovations must compete for talent with larger companies, but finds its insurance premiums rising quickly.

        “It's a struggle and an issue for many small companies,” Mr. Larkins said.

        “When you talk about employee morale, companies that can deliver enhanced health-care benefits and minimize any out-of-pocket expenses will win over the long term.”

Tighter controls

        More than seven of 10 large companies told the Kaiser foundation that they would have to continue to increase premiums in the years to come.

        Mr. Day, of Sentron Medical, said rising insurance costs do not necessarily mean that companies are going to end up dropping coverage for workers.

        “I think what we're going to see is the employee portion of the premium increase and tighter controls on newer therapies,” Mr. Day said. “Some will probably not be allowed.”

        Ms. DiMario of Employer Healthcare Alliance also does not think that employers are going to eliminate insurance. Without that benefit, many workers would simply find a new company.

        “At this point, I don't see anybody in our marketplace abandoning health-care coverage completely,” she said.

        Jerri Cunigan, a Northern Kentucky resident and licensed practical nurse who is on disability for a knee injury, said her husband's premiums for the family policy have increased from about $41 per week two years ago to $59 per week today.

        Co-payments for office visits have risen as well, she said, and something has to be done. “Where is it going to end?” she asked.

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