Small Business Faces Sharp Rise in Costs of Health Care

By REED ABELSON - The New York Times - October 24, 2009
As Congress nears votes on legislation that would overhaul the health care system, many small businesses say they are facing the steepest rise in insurance premiums they have seen in recent years.

Insurance brokers and benefits consultants say their small business clients are seeing premiums go up an average of about 15 percent for the coming year — double the rate of last year’s increases. That would mean an annual premium that was $4,500 per employee in 2008 and $4,800 this year would rise to $5,500 in 2010.

The higher premiums at least partly reflect the inexorable rise of medical costs, which is forcing Medicare to raise premiums, too. Big employers are also seeing higher health insurance bills, but because they have more negotiating clout, their increases are generally not as steep.

Higher medical costs aside, some experts say they think the insurance industry, under pressure from Wall Street, is raising premiums to get ahead of any legislative changes that might reduce their profits.

The increases come at a politically fraught time for the insurers, as they try to fight off the creation of a government-run competitor and as they push their case that they have a central role to play in controlling the nation’s health care costs.

President Obama, in his Saturday radio address, said the Democrats’ health insurance overhaul would help small businesses and stimulate the economy by providing relief from “the crushing costs of health care — costs that have forced too many small businesses to cut benefits, shed jobs, or shut their doors for good.”

The insurance industry has already been under sharp attack by Democratic lawmakers who favor creating a government-run insurance plan that would compete with private insurers. Without that competition, proponents say, insurers will continue to price coverage beyond the reach of many Americans.

The House speaker, Nancy Pelosi of California, said the sharp rise in premiums for small businesses offered the latest evidence that Congress must act swiftly on health care legislation.

“This underlines the urgent need for health insurance reform, including a public option,” she said in an interview. “We need to have competition for the insurance companies to keep premiums down.”

Insurers vehemently oppose a government-run insurance plan. So do most Republicans, who traditionally portray themselves as champions of small business.

They, with the insurers, argue that the proposed legislation would raise premiums across the board because sick people would be more likely to enroll than healthy people. They also say the taxes and other ways of paying for the program would be passed on to employers and their workers in higher premiums.

The minority leader, Mitch McConnell, Republican of Kentucky, said in a response to the president’s radio address, “We can’t support a bill that will raise premiums.” The big insurance companies declined to comment.

With negotiations over next year’s premiums still under way between some small companies and insurers, data on rate increases are mostly anecdotal. Formal surveys have not yet been completed by the health benefits consultants who track the figures. And in some parts of the country, experts say they are not seeing overly high rates.

But benefits consultants say there is no doubt that many small businesses are seeing a spike in premiums. Edward Kaplan, a consultant with the Segal Company, said his clients are seeing renewals for coverage at prices 15 to 23 percent higher this year. Last year, he said, they typically faced increases of 7 to 12 percent.

The brokers and consultants say the price jumps seem hard to justify. “Frankly, I’m mystified by the size of the increases,” said one broker, Charles J. Newman, who works with small employers in the New York area.


Some say the threat of an overhaul may be at least part of the reason. Joshua Miley, a consultant with HighRoads, which analyzes benefit information for employers, said the “undercurrent of health reform is driving part of the renewal increases.”

HighRoads projects that premiums will rise 14.4 percent for an individual in a health maintenance organization plan at a typical small employer.

There is no question that insurers are under pressure from Wall Street. In recent years, insurers were often not quick enough to raise their premiums well above the rising cost of medical care.

But they have heard from angry investors who disappointed by the companies’ earnings.

“There’s no one out there who hasn’t had to do a mea culpa to Wall Street,” said Sheryl Skolnick, an analyst for Pali Capital who follows the companies. While the industry is particularly vulnerable now in Washington, she said, “it seems like they’re more afraid of Wall Street.”

Michael A. Turpin, a former senior executive for UnitedHealth, the insurer, and now a top official at USI Holdings, an insurance brokerage firm, said insurers were now “under so much pressure to post earnings, they’re going to make hay while the sun is shining.”

Along with many Republican lawmakers, the insurers say the current Congressional proposals do too little to address the underlying reasons for high premiums — the unabated rise in medical costs and effects of a weak economy. Hospitals, for example, have been treating greater numbers of people who have lost their jobs and their insurance, and they are passing along some of those costs by charging higher prices to private insurers.

The industry also points to low government payments to hospitals and doctors, which insurers say result in higher prices for employer-based coverage to make up for the shortfall.

In an analysis released two weeks ago by the industry’s trade association, America’s Health Insurance Plans, insurers said premiums would rise even faster under the legislation under study in Congress — an assessment fiercely disputed by Democratic Congressional leaders and some health care economists but shared by many Republicans.

Of course, the mere mention of profit pressures tend only to galvanize supporters of a Congressional health care overhaul.

Small businesses, besides having less negotiating leverage than big employers, tend to pay more for the same coverage because they cannot spread the cost of expensive medical conditions or hospitalizations over large numbers of workers. Premiums can be especially high if they have sick or older workers.

Small businesses, which employ about 40 percent of the private labor force, are a big constituency for both parties. And they have long complained they are forced to pay more for the same coverage as large employers.

Owners of small companies say the lack of options is why they have been paying increasingly higher premiums for less and less coverage — this year perhaps more than ever.

In August, when Walter Rowen, who owns Susquehanna Glass in Columbia, Pa., sought to renew his company’s coverage for two dozen employees, he said his insurer demanded a 160 percent rate increase. Mr. Rowen said he was told his work force was “getting too old and very expensive.”

Mr. Rowen said his insurance broker found that any other health plan was likely to charge 30 to 50 percent more than he paid last year. He chose a less generous plan from a different carrier for 44 percent more.

David M. Herszenhorn contributed reporting.
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Is a Virus the Cause of Fatigue Syndrome?

By DENISE GRADY - The New York Times - October 12, 2009
Could a virus be the cause of chronic fatigue syndrome?

A study published last week in the journal Science suggested that might be the case, reporting that many patients who had the syndrome were infected with a recently discovered virus.

Chronic fatigue syndrome has long been a medical mystery and the subject of debate, sometimes bitter, among doctors, researchers and patients. It affects at least one million Americans, causing extreme fatigue, muscle and joint pain, sleep problems, difficulty concentrating and other symptoms. Its cause is unknown, symptoms can last for years and there is no effective treatment. Researchers disagree about whether it is one disease or a collection of symptoms that may have different causes in different patients. It has sometimes been stigmatized as more mental than physical, with patients labeled neurotic, depressed or hypochondriacal. Many patients find even the name of the disorder offensive, a not-so-subtle hint that it is not a real disease.

The new report has intrigued scientists, been seen as vindication by some patients and inspired hope for a treatment.

“I just feel like the whole future has changed for us,” said Anne Ursu, 36, a writer living in Cleveland who has had the syndrome in the past.

But the new study is not conclusive, and a great deal of work remains to be done to find out whether the new virus really does play a role. Just detecting it in patients does not prove it is what made them sick; people with the syndrome may have some other underlying problem that makes them susceptible to the virus, which could be just a passenger in their cells.

Even so, thousands of patients have already contacted scientists, asking to be tested, said Dr. Judy Mikovits, the first author of the study and the research director at the Whittemore Peterson Institute in Reno, a research center created by the parents of a woman who has the syndrome. Dr. Mikovits said she expected a test to become available “within weeks.”

The new suspect is a xenotropic murine leukemia virus-related virus, or XMRV, which probably descended from a group of viruses that cause cancer in mice. How or when XMRV found its way into humans is unknown. But it has also been linked to cancer in people: it was first identified three years ago, in prostate cancer, and later detected in about one-quarter of biopsies from men with that disease (and in only 6 percent of benign biopsies). It is a retrovirus, from the same notorious family that causes AIDS and leukemia in people.

Dr. Mikovits and researchers from the National Cancer Institute and the Cleveland Clinic reported in Science that 68 of 101 patients with chronic fatigue syndrome, or 67 percent, were infected with XMRV, compared with only 3.7 percent of 218 healthy control subjects. Further testing after the paper was written found the virus in nearly 98 percent of about 300 patients with the syndrome, Dr. Mikovits said.

She said she believed that the virus would eventually be found in every patient with chronic fatigue syndrome. XMRV affects the immune system, can probably cause a variety of illnesses and may join forces with other viruses to bring on the syndrome, she said.

The study received a mixed review from Dr. William C. Reeves, who directs public health research on the syndrome at the Centers for Disease Control and Prevention. He called the research exciting but preliminary, and said he was surprised that a prestigious journal like Science had published it, because the researchers did not state the ages or sex of the patients and controls, or describe the duration of the illness or how it came on.

“If I don’t know the nature of the cases and controls, I can’t interpret the findings,” Dr. Reeves said.

“We and others are looking at our own specimens and trying to confirm it,” he said, adding, “If we validate it, great. My expectation is that we will not.”

He noted that there had been false starts before, including a study in the 1990s linking the syndrome to another retrovirus, which could not be confirmed by later research.

Many patients and a community of doctors and researchers who specialize in the syndrome take issue with the disease centers’ approach to the illness and the way it defines who is affected. They claim that the C.D.C. includes people whose problems are purely psychiatric, muddying the water and confounding efforts to find a physical cause.

Frustration with the lack of answers led Annette and Harvey Whittemore, whose 31-year-old daughter has had the syndrome for 20 years, to spend several million dollars to set up a research institute at the University of Nevada in Reno in 2004, and to hire Dr. Mikovits to direct it.

Mrs. Whittemore said she had long believed that the syndrome was an infectious disease, but that scientists had rejected the idea.

She finally decided, she said, “if there was a place of our own where we could find the answers, we could do it more quickly.”

Dr. William Schaffner, an infectious disease expert at Vanderbilt University, said that the notion of a lingering viral infection was plausible. He said that although some patients claiming to have the syndrome seemed more likely to have a psychological problem, others seemed to have a physical illness.

“There is a group who are young, healthy, active and engaged, and all of a sudden they are laid low by something,” Dr. Schaffner said. “Everyone tells the physicians these are people who are functional and productive, and this is totally out of character. They are frustrated and often quite disheartened. You feel that medical science hasn’t caught up with their illness yet.”

To determine whether XMRV is to blame, more studies are needed, said Dr. John Coffin, a professor of molecular biology and microbiology at Tufts University. It would help to find an animal model, he said, and to look at stored blood samples to find out if there were people who became ill some set amount of time after contracting the virus. If antiviral drugs make patients improve, that will also help make the case against the virus, he said.

The National Cancer Institute is taking XMRV seriously, said Dr. Stuart Le Grice, head of its Center of Excellence in HIV/AIDS and Cancer Virology.

He said health officials became especially concerned last spring when several research teams looking at prostate cancer reported finding XMRV in 3 percent to 4 percent of blood samples from healthy people in control groups. That could translate into 10 million American being infected with a newly discovered, poorly understood retrovirus that has already been linked to two diseases.

“Any virus at that level is obviously cause for concern,” Dr. Le Grice said, adding that it was important to find out if the virus was associated with any more diseases, and how closely.

He said that just carrying the virus did not necessarily mean a person was at high risk for disease, noting that people may harbor other viruses that will never harm them. The immune system probably keeps the viruses in check.

But he asked: “If it is a problem, how well can we diagnose it and how well can we treat it?”

Even though antiretroviral drugs have already been developed to treat H.I.V. infection, he said this virus was different and might need its own line of drugs.

He said more studies were needed to find out how common the virus is and how it is being transmitted. It is not known whether people can catch the disease from mice, or can infect one another. Retroviruses are often spread by blood and bodily fluids.

“How significant a risk is this to blood banks?” Dr. Le Grice asked. “Do we need to consider large-scale screening in blood banks?”

He said the institute would be working to develop reliable diagnostic tests.

Dr. Le Grice emphasized that there is no evidence that the virus is spreading through the population.

“I don’t want to scare anyone at the moment,” he said.

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