House Majority Policy Committee

House Majority Policy Committee Hearing

Testimony of Michael Campbell, Esq., Executive Director of the PA Health Law Project

March 28, 2007

Good morning Chairman Eachus and members of the Committee.  Thank you for inviting me to testify before you today.  My name is Michael Campbell.  I am the Executive Director of the Pennsylvania Health Law Project.  The Health Law Project (PHLP) is a statewide public interest law firm with a mission of assisting low income persons, the elderly and those with disabilities to access health care coverage and services.  The Health Law Project, which is part of the Pennsylvania Legal Aid Network, has a staff of twelve: eight attorneys, three paralegals and a part-time physician consultant. We maintain offices in Philadelphia, Harrisburg and Pittsburgh, and operate a statewide toll-free helpline which provides help to over 5,000 persons across Pennsylvania annually. We get calls from all 67 counties.  There was a time when you didn't need a lawyer to get health care, but unfortunately, that is not the case anymore.

While I could talk at length about the stories of those who are suffering because of the lack of health insurance across the Commonwealth, I come before you today wearing not my advocate's hat, but instead my employer's hat.  I've been asked to talk about the cost of providing health insurance to my employees.

PHLP is a non-profit organization with an annual budget just over $1million.  You did not hear me mention secretaries, receptionists, et cetera among my staff.  There are none.  If you do the math, you will see that we run our organization on a shoestring, which is truly amazing when you consider that our senior staff attorneys average over 30 years experience and are widely recognized in their field.  Being a responsible employer, I believe it is critical that we offer a solid health insurance to our employees and their families.  After all, we are the Health Law Project.

As a non-profit that relies to a great extent on foundation grants and some government funding, we do not have a lot of flexibility in our limited budget.  So you can imagine my shock in early December, 2005 when I opened a letter from our health insurance broker and read that our premiums were going to jump by 40%, from under $7,000 to over $10,000 per month.  Being prudent, we had planned for an increase of about 15%.  But this increase was roughly the salary of a new paralegal. And I had to respond to the renewal notice by December 15th in order to keep the coverage from lapsing.  There was no prior warning.  There was no time to shop around.  And of course, I couldn't even get the broker on the phone for an explanation.  My choices were to bite the bullet and try to raise $40,000 or mover to a cheaper plan.

We did a combination of the two.  We moved to a plan with higher co-payments. And I still pay over $115,000 per year now for health insurance.  That is about 10% of my budget, and it does not include dental coverage.  I never got a satisfactory explanation as to why the rates went up.  There were vague references to our staff being of child bearing age (which they were before and after the rate increase), but little else.

I have to believe that my situation is no different from what employers all over the Commonwealth face every day.  Health insurance rates are climbing at an untenable pace.  Employers lack the resources to bargain.  And the selection of a health plan is driven almost exclusively by cost and rarely if ever by coverage.  There is little or no capacity for employers to shop for more subtle indicators of a quality health plan, such as a good prescription drug formulary or a reasonable definition of medical necessity.  You are just happy to provide whatever coverage passes for affordable.

I believe that steps must be taken to prevent the type of irrational, blind sided rate increases that I faced 16 months ago, and may face again.  Steps must be taken to reduce the cost of health care, by paying for quality, accessible care, and not paying for poor care in the most expensive setting.

I don't know how much of my rate increase was attributable to health care providers charging higher rates to cover patients who were uninsured when they sought treatment in the emergency room.  But I am very resentful of having to subsidize through higher rates the cost of health care for the employees of those employers who do not see fit to provide their employees with basic coverage.  I can tell you (and now I'm wearing my other hat) that scores of people my program's helpline every year because they are delaying diagnostic care and preventive treatment because they have no health insurance and no health care provider will see them.  Their only ticket to care is when their condition becomes an emergency and they may be admitted to the hospital through the emergency room.  Those uncompensated ER visits become part of the hospital costs which inflate the insurance costs for the rest of us.

Of major importance is the need to return the business of health insurance to the days when the business was about risk spreading rather than risk avoidance. The more sophisticated the insurer's ability to adjust rates to fit the profile of the group of insured individuals, the closer we get to self pay, or the antithesis of insurance. I don't know if the reason my rates went up was really because some of my employees have family members with expensive health needs.  But no business should be placed in jeopardy because an employee or family member is sick.

Once again I want to thank you for the opportunity to speak here this morning, and I congratulate you for taking on the difficult but critically important issue of health care reform.  If the committee would like to reach me at some time in the future, my email address is: mcampbell@phlp.org.