Little Rock Employers Shift More Health Care Costs to Workers

Limited Health Plan Competition Frustrates Employers; Situation Seen as Untenable

News Releases
June 30, 2003

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ASHINGTON, D.C.— Rapidly rising health insurance premiums are prompting Little Rock employers to shift more costs to workers, who—as a result—are finding coverage to be increasingly difficult to afford, according to a new Community Report released today by the Center for Studying Health System Change (HSC).

Some workers have dropped employer-sponsored coverage to seek coverage in the individual insurance market, where, if they are young and healthy, they can find lower-priced coverage. Arkansas Blue Cross Blue Shield has developed insurance products geared toward these consumers. The shift could create problems for employer plans if remaining workers are older and in poorer health, potentially driving even higher premium increases because these workers are likely to need more health care services.

Employers blame limited health plan competition for some of the rapid rise in premiums, while health plans argue premium hikes are due to providers’ demands for higher payments, increased use of services and new technology.

"Exclusive plan-hospital alliances have divided the Little Rock health care market, deterring health plans from entering the market," said Paul B. Ginsburg, Ph.D., president of HSC, a nonpartisan policy research organization funded exclusively by The Robert Wood Johnson Foundation.

Other key findings of the report, Health Care Cost Concerns Intensify in Little Rock, include:

• Hospitals are struggling with increased competition for profitable specialty services from both hospitals in outlying communities and physicians who are adding capacity to provide more services in their practices.
• Medicaid eligibility for adults remains restrictive despite a small expansion, while eligibility for children remains relatively generous.
• The health care safety net has grown stronger as provider finances improved and capacity expanded slightly.

Little Rock is one of 12 communities across the country tracked intensively by HSC researchers through site visits and surveys. The new report is based on a January 2003 site visit and interviews with nearly 60 health care leaders, representing health plans, employers, hospitals, physicians and policy makers.

The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely insights on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded exclusively by The Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.