Fairfax Family Faces Health Care Crisis

Above Photo By ALISON REDLICH, Burlington Free Press

Health care: A crisis of cost

January 8, 2006
The people in this series gave permission for their doctors, nurses and insurers and for the places where they received care to discuss their cases. Federal law and medical ethics would normally prohibit these professionals from discussing an individual's medical condition.
By Nancy Remsen
Free Press Staff Writer

FAIRFAX -- It had to be a typo.

Kathy Hubbard sat at her kitchen table with the letter from her family's health insurer and shook her head.

It was a year ago. The letter from Blue Cross/Blue Shield of Vermont told her that the 2005 deductible -- the amount she and husband Steve would have to pay for medical procedures before insurance kicked in -- would increase tenfold to $5,000 each. If both became sick or injured, they would end up paying nearly 20 percent of their total income.

Where would they find that kind of money?

It had to be a typo.

But it wasn't.

The Hubbards were joining the growing ranks of Vermonters -- and Americans -- squeezed by the nation's increasingly costly system of health care.

It's a system in which Americans spend 50 percent more per person than any other nation yet don't enjoy top-ranked health, based on comparisons of life expectancy and infant mortality.

It's a system in which some people benefit from cutting-edge medicine, but many with chronic conditions fail to receive adequate care even half the time.

It's a system in which health care spending over the last decade -- increasing by an average of 7.5 percent a year -- has galloped ahead of the 2.5 percent average annual jump in the consumer price index.

It's a system many say is broken.

Beginning today, The Burlington Free Press presents the stories of four Vermont families, each with a different perspective on the cost of health care.

The Hubbards of Fairfax have insurance, but they are paying more, getting less and worried sick. What if something bad happens? They found out last fall.

Dorothy LaForce of Colchester wouldn't be alive today but for ongoing and extraordinary medical care. She couldn't pay for this expensive care if she didn't have Medicare and a top-notch supplementary insurance policy. How will society pay the steep cost of end-of-life care as the baby boom generation hits old age?

Two members of the Allen family in West Charleston cope with lifetime medical conditions, but they save themselves and the system money by careful monitoring of their diseases and strict adherence to treatment. Is this a model others could follow to help slow the growth in health spending?

The Gosselins of Derby have gone without insurance for a decade, gambling against ever higher odds that they will continue to enjoy good health and avoid financial ruin. What if their luck runs out?

The final story in the series offers ideas from experts and average folks about how to reform health care to make it more affordable.

Treading water

Kathy Hubbard is a part-time bookkeeper who doesn't have health insurance from through any of her four employers.

Husband Steve is warehouse manager at Artist Mercantile in Morrisville, a distributor of German-made paints and art supplies. The company provides health insurance for the couple, but not their teen-age daughter.

Dave Ingraham owns Artist Mercantile. A year ago, he made a tough decision to change the company's health plan so he could afford to continue offering insurance to his two employees.

Ingraham pays the full cost of health insurance, he said, because "there are just three of us here and it is like a family thing."

The rising cost of health insurance has a huge impact on this tiny company, where Ingraham is as likely to be sweeping the floors of the 6,000-square-foot warehouse as sitting at his desk in the paneled office he shares with his sales manager. A year ago, Ingraham moved the 6-year-old business from Stowe to a less expensive location in a Morrisville industrial park.

After watching the cost of health insurance jump by more than 20 percent over four years, Ingraham said he had to find a new health plan that fit within the company's health care budget of $24,000 a year. He keeps shopping for plans that stay within that amount. "We keep taking on more of the risk ourselves."

Steve Hubbard, a man of few words, spends long hours on the job to help Ingraham make a success of the business. He says he appreciates that his boss continues to provide health insurance for him and his wife. Ingraham is in the minority: Only 37 percent of Vermont employers with 10 or fewer workers provide health insurance.

The Hubbards' insurance plan requires the couple to pay $25 to see a nurse practitioner or a doctor for an office visit and the full cost of all diagnostic tests until they meet their deductibles. The plan covers drugs but requires them to pay $5 to $40 for each prescription.

For Steve Hubbard, the most significant component of the insurance is "that cushion on the high end if overwhelming medical bills come in." Once he or his wife meet the deductible, the plan covers all medical expenses without any further cost-sharing.

"It's great to have it," he concludes, but there is no escaping the new reality of the high, out-of-pocket deductibles. "It does put a little stress on you."

Insurance realities

Increases in the price of health insurance have been facts of life for employers for more than a decade, whether they run micro-businesses like Ingraham's or major enterprises like IBM.

The increases have affected everyone, taking ever-larger bites from the budgets of nonprofit agencies, state and local governments, and school districts, too. In Colchester in October and Barre in December, teachers went on strike in part over how taxpayers and teachers would split the mushrooming cost of the teachers' health insurance premiums.

Generally, Vermont employers who offer insurance pay most of the cost of the premiums for their workers -- on average 81.8 percent. These employers also cover 78.7 percent of the premium cost for their workers' families.

Premiums for an individual averaged $4,024, and family coverage costs an average of $10,880, according to 2005 data in a national survey by the Kaiser Family Foundation. Since 2000, Kaiser officials reported premiums had increased 73 percent.

In Vermont, the state's largest employers saw an average 6.2 percent increase in their health insurance premiums in 2004, while employers with 50 or fewer workers experienced an average 10.6 percent increase. Premiums really jumped for individuals and families who weren't part of a larger purchasing pool such as a trade association and bought coverage on their own. They paid an average of 15.8 percent more for the same policy.

The cost of premiums varies based on the number of people covered. Larger pools of customers more easily cover extraordinary medical costs than small pools. Higher financial risk means higher premium costs.

All the rate increases reflect that medical care becomes more expensive every year, explains Leigh Tofferi, a spokesman for Blue Cross/Blue Shield of Vermont. Blue Cross data indicate that medical expenses have risen more than 10 percent each year since 2000, Tofferi said, in part because new diagnostic tools and treatments always seem to cost more, and the number of people demanding care keeps increasing as the baby boom generation ages. Tofferi noted, too, that pharmaceutical costs grew by nearly 20 percent in four of the past six years.
Rising costs are taking a toll.

More Vermonters are uninsured. About 64,000 Vermont residents have no health insurance, an increase of 40 percent from the 43,000 in 1999. Put another way, 10 percent Vermonters don't have health insurance today compared to 7 percent in 1999.

More Vermonters enroll in subsidized government health programs. Medicaid, a federal/state health plan for low-income adults and children, covers 134,000 Vermonters -- or 22 percent of the population -- up from 111,000, or 18 percent, five years ago.

More tax dollars are spent on health care. Vermont's Medicaid program has nearly doubled in cost, going from $437 million in 2000 to $849 million this year. That has forced lawmakers to cut coverage, reduce payments to doctors and hospitals, increase fees for participants and shift money from other government priorities to cover health expenses.

More employers drop insurance or ask workers to share costs. A national survey by the Kaiser Family Foundation found the percentage of firms offering insurance dropped from 69 percent in 2000 to 60 percent in 2005.

More Vermonters face tough financial choices. Asked to pay bigger deductibles, co-pays and cost-sharing, individuals might consider skipping checkups and early consultations on medical problems -- which will result in more expensive care later. Or they have to squeeze other daily expenses so they can pay medical bills.

Financial lifesaver

Steve and Kathy Hubbard are well-acquainted with the high cost of medicine -- and the benefits of a comprehensive health plan.

Their 14-year-old daughter, Elizabeth, was diagnosed at age 2 with neurofibromatosis type 1, a genetic disorder that causes tumors to grow alongside nerve networks. Lizzie, as the exuberant teen prefers to be called, must make annual treks to specialists at Children's Hospital Boston, who check the status of her tumors using the latest scanning equipment. She sees a neurologist at Dartmouth Hitchcock Medical Center in New Hampshire twice a year. Her medical bills run at least $5,000 a year. Last summer, she also needed a $3,000 procedure to surgically extract several teeth tangled in a tumor on her cheek.

Lizzie's medical care isn't covered by her parents' private insurance. The family's modest $48,000-a-year income qualifies Lizzie for subsidized health care under the state's Dr. Dynasaur program. The family pays $80 a month for their daughter's all-inclusive medical coverage.

Dr. Dynasaur has been a financial lifesaver -- so precious that Kathy limits her work to ensure her compensation won't push the family's income over the program's upper limit of $48,276 for a three-person household.

"We couldn't afford $5,000 every year to shell out for Elizabeth," Kathy explained. Locking eyes with her pony-tailed only child nearby, she smiled and revised her statement. "Well, she might be worth it."

Holding the line

As 2005 began, the Hubbards steeled themselves to the new $5,000 deductibles, confident they could hold down their medical expenses. Kathy noted that in 2004, their out-of-pocket expenses didn't even reach $500.

Steve Hubbard's strategy was to avoid doctors. "I really don't have too many pressing issues."

The new $5,000 deductible was enough to deter him from seeking medical treatment for anything but the most serious problems.

Kathy believes in annual physicals, particularly given that in 2003 she was diagnosed with Type 2 diabetes.

"Kathy is fortunate," said Jennifer Laurent, the nurse practitioner Kathy sees at Family Practice Associates in Cambridge. "Her diabetes is controlled without any of the big interventions."

Laurent said Kathy is supposed to watch her diet, exercise to control her weight and have her blood checked regularly.

Despite the couple's best intentions, though, the Hubbards struggled to keep their medical costs down.

Kathy's expenses mounted as the year progressed. There were quarterly blood tests because of her diabetes -- $45 to $75; a referral to an asthma specialist to remedy a longstanding breathing problem -- $307; and the mammogram she had put off for a couple of years -- $167.

Most people don't call around for the lowest price for a medical procedure, but Kathy did before she scheduled a mammogram. She said she saved about $250 by going to Vermont Radiologists in South Burlington rather than Fletcher Allen Health Care.

The unforeseen occurs

The Hubbards' budget-buster turned out to be a grapefruit-sized fibroid tumor in Kathy Hubbard's uterus.

For months, Kathy coped with painful menstrual cramping and excessive bleeding. "She was just miserable," Laurent said. She had her patient try drug therapies -- the more conservative and least expensive options. They didn't solve the problem, so Laurent recommended a specialist.

Dr. Elisabeth Fontaine, a gynecologist in St. Albans, said the tumor caused Kathy's uterus to balloon to three times its normal size. "It's not life-threatening," Fontaine said. "It's a pain."

Surgery was the best remedy, Fontaine concluded.

In late November, Kathy was wheeled into the operating room at Northwestern Medical Center in St. Albans. She expected to go home after a single night in the hospital, but her surgery turned out to be complex because of the size of tumor. She spent an extra day.

The charge for the surgery and two days in the hospital: $9,453. The bills from Dr. Fontaine, an assistant surgeon and an anesthesiologist, which came separately because the doctors don't work for the hospital, totaled $4,650 -- bringing the surgery charge to more than $14,000.

The hospital bill covers the staff who registered Kathy shortly after 7 a.m. the Monday she had surgery, the nurses who readied her for the procedure in a state-of-the-art surgical services suite, the team who supported the doctors in the operating room, the nurses watching over her when she woke up in a nearby recovery room and the nurses upstairs who changed her bandage and helped her shower and walk the halls Tuesday.

Hospitals receive 40 cents of every health care dollar spent in Vermont. Their top expenditure is for staff.

At Northwestern Medical Center, staff costs are 55 percent of the hospital's budget, according to Chief Executive Peter Hofstetter. Employees are well-paid, he said, so this 70-bed community hospital can attract and hold onto staff in the face of shortages in critical professions such as nurses -- a nationwide problem. Northwestern gave employees 4 percent raises this year.

Updating facilities and equipment also drives up hospital costs. Northwestern spent $5 million to renovate and expand its surgical suite in 2002 to accommodate the 75 percent of patients who go home the day they have surgery.

Then there are the typical cost pressures as everything from fuel, paper and latex gloves goes up in price, Hofstetter noted.

Because of all these factors, the total revenue required to operate Vermont's 14 hospitals has increased an average of 7.4 percent in each of the past five years. Hospital rates have gone up, too, although Northwestern required the smallest annual increases of any of the hospitals -- an average 3.5 percent a year since 2002.

"We've tried to just watch all the things you need to watch," Hofstetter said.

Paying the bill

Kathy Hubbard's share of her $14,000 surgery is $3,837, the amount she still owed to meet her $5,000 deductible.

Unable to work full time in December, she worried how she would pay the bill.

"We won't be going out for pizza," she told Lizzie. "We will just stay home a lot more. Instead of renting movies, we will borrow.

"I'll look around the house and see what I can sell," she added. She previously sold a pair of vintage Barbie and Ken dolls for $500. She still had 20 Barbie dolls stored in her basement -- all in their boxes.

"I figured maybe when Lizzie went to college they might be worth something," Kathy Hubbard explained. Now, if she can get $20 apiece, she'll be able to cover $400 of the bill.

Selling dolls isn't -- can't be -- the Hubbards' long-term strategy to pay for health care. And they need a strategy.

In early December, the couple learned Steve's boss had again changed the company's health plan to cope with a 13 percent bump in rates.

In 2006, the $5,000 per-person deductible becomes $10,000.

Contact Nancy Remsen at 229-9141 or nremsen@bfp.burlingtonfreepress.com