Joel Young: The hidden costs of health care

25 Nov

This guest post was written by Joel Young, a lifelong Bay Area resident and a member of the AC Transit Board of Directors.

As the raucous health care debate plays out in Washington DC, I have become increasingly aware of the stakes for the Bay Area. Skyrocketing health care costs touch us all, and in ways you might not expect.

In February of this year, I was appointed to the Alameda-Contra Costa Transit District Board. I knew upon taking up my post that there were many costs associated with running such an expansive transit system. Most of these expenses are obvious, like fuel, maintenance, staff salaries and administration.

Most people wouldn’t peg health care costs as a major portion of our budget. But for fiscal year 2009-2010, AC Transit’s total healthcare costs, which include medical, vision and dental care premiums, are approximately $36.4 million.

The story only gets worse with time. By fiscal year 2017-2018, these costs are expected to reach $55.7 million. That’s a 56 percent cost increase from the FY2009-10 baseline.

Unfortunately, there is little AC Transit can do to prevent the increase. Every year our insurance providers raise our annual premiums by at least six percent. And due to lack of competition in the insurance market, we are unable to look for a cheaper plan.

So, what do these escalating costs mean to the organization and AC Transit riders?

Based on our projections, over an eight year period we will have spent an additional $95.8 million on health care. That translates into 465,106 platform hours of service over that period, which is the equivalent of providing weekday bus service for 83 days, purchasing 180 brand new hybrid buses, doubling the amount of weekend service or providing 4.8 million monthly bus passes to children and the disabled.

I fear that these health care cost increases, along with the normal inflationary cost pressure associated with other operational expenses will outpace our revenue growth. Since we still have to balance the books, the increasing costs would likely force the board to reduce service or increase fares.

I dealt with that experience this year, and I can’t begin to tell you what a bitter, emotionally draining experience it is.

I heard from people like Michelle Lynne, a disabled resident who relies on various bus lines to conduct the everyday activities of her life. If those bus lines are eliminated she will not be able to leave her home.

I have had to tell people like Mark Williams, who can barely afford the current fares, that they are going to have pay more to ride the bus. Oh and by the way, you’re gong to have to wait an additional 30 minutes for that bus after walking an additional half-mile to the nearest stop.

And I have seen our dedicated employees join the ranks of the unemployed as we’ve cut personnel to reduce costs.

For these reasons, I hope that our elected leaders in Washington will have the determination to solve this issue for us.

As an organization we have tried to reduce costs as much as possible while struggling to maintain a basic level of service. But there is not much more “fat” to trim and AC Transit will face ever-growing financial turmoil if our health care expenses continue to rise faster than our revenues.

I am excited that Congress has passed a bill. Now it is time for the Senate to act.

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