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Americans spending more for less health care services; workers’health costs rise faster than incomes
Americans are spending more for health care and getting less, and some 14.3 million people are spending more than 25% of their incomes on health care, up from 11 million four years ago. Higher premiums are causing small businesses and workers to drop their health insurance coverage. This is another study designed to show how bad the health care insurance markets and providers are serving consumers, and it has to be taken with a huge grain of salt, considering that health care still is a bargain compared with other things consumers buy and compared with the ROI for patients. -more-
Americans are spending more for health care and getting less, and some 14.3 million people are spending more than 25% of their incomes on health care, up from 11 million four years ago. Higher premiums are causing small businesses and workers to drop their health insurance coverage. This is another study designed to show how bad the health care insurance markets and providers are serving consumers, and it has to be taken with a huge grain of salt, considering that health care still is a bargain compared with other things consumers buy and compared with the ROI for patients.
Impact graphs from The Washington Post:
Nationwide, workers’ costs for health insurance have risen by 36 percent since 2000, dwarfing the average 12.4 percent increase in earnings since President Bush took office, the liberal consumer group Families USA reports in an analysis scheduled for release today. The number of Americans spending more than a quarter of their income on medical costs climbed from 11.6 million in 2000 to 14.3 million this year, according to the group.
The news comes as many companies are dropping medical coverage entirely or trimming their benefit packages, while taxpayers are subsidizing millions of people below the poverty line who have enrolled in the state-run Medicaid and Children’s Health Insurance Program, a separate survey by the Kaiser Family Foundation found. Hardest hit have been low-income working families, Hispanics and people with chronic conditions such as diabetes, asthma or depression.
“The cost of family health insurance is rapidly approaching the gross earnings of a full-time minimum-wage worker,” said Drew Altman, president and chief executive of the nonprofit foundation, which compiled the data. “If these trends continue, workers and employers will find it increasingly difficult to pay for family health coverage, and every year the share of Americans who have employer-sponsored health coverage will fall.”
That trend has already begun. From 2001 to 2004, the proportion of workers receiving health coverage through an employer fell from 65 percent to 61 percent, according to the latest Kaiser data. That decline translated into 5 million fewer jobs providing health benefits, with the sharpest drop in small businesses.
The impact on businesses cuts across the board, however, according to a survey of 900 businesses by Mercer Human Resource Consulting. The report projects a 9.6 percent increase in health care spending per employee in 2005.
“For many employers, an increase of this magnitude—four times the rate of general inflation—is painful to consider,” said Mercer spokesman Blaine Bos. “And some just aren’t going to sit still for it.”
The Indianapolis Star and other papers play up the Families USA’s story in terms of health costs rising faster than incomes, but because employers pay a big share of insurance premiums, the premium increase was part of the increase in workers’ pay.
Thus, the Star reports:
Premium costs for private health insurance coverage grew 35.9 percent from 2000 to 2004, while average individual earnings grew 12.4 percent, according to the report. Health premiums paid by Hoosier workers rose by nearly 40 percent during that same period, while average earnings increased just 12 percent.
The analysis by the Lewin Group, a private health economics consulting firm, was done for Families USA, a consumer-oriented health advocacy group that has supported Democratic presidential nominee John Kerry’s health care proposals.
The findings are similar to those of nonpartisan entities such as the Kaiser Family Foundation and the Commerce Department.
Americans are spending a major portion of their annual incomes on health care, too. From 2000 to 2004, the number whose health care costs exceed one-fourth of their earnings rose to 14.3 million from 11.6 million.
The study ignores higher enrollment in Medicaid and the State Children’s Health Insurance Program, plus last year’s Medicare prescription drug law, said Health and Human Services spokesman Bill Pierce.
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