Health care costs rose while insurance coverage fell, studies show

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September 8, 2011
Health care costs rose while insurance coverage fell, studies show
By Noam N. Levey | McClatchy-Tribune News Service

WASHINGTON — U.S. workers whose wages stagnated over the last decade also saw their health insurance degrade, even as medical costs gobbled up a growing share of their income, two new studies show.

An estimated 29 million adults who had health insurance lacked adequate coverage in 2010, leaving them exposed to medical expenses such as high deductibles that they couldn't afford, according to a survey by the nonprofit Commonwealth Fund.

That is up from 16 million underinsured people in 2003, the survey found, underscoring the rising burden that insurance plans are placing on consumers as the industry raises required co-pays and deductibles.

"Underinsured families are at nearly as high risk as the uninsured because, while they have health insurance, holes or limits in their plans expose them to often unaffordable medical costs," said Commonwealth Fund Senior Vice President Cathy Schoen, lead author of the new report, which was published in the journal Health Affairs.

More workers also simply lost coverage over the last decade, the survey found. Fifty-two million adults ages 19 to 64 did not have insurance at some point in 2010, up from 46 million in 2003.

That has left nearly half the working-age population without enough protection from illness. Altogether, 44 percent of U.S. adults were either uninsured or underinsured last year, according to the Commonwealth Fund.

Children and seniors are more likely to have insurance because many qualify for public programs such as Medicare and Medicaid.

The erosion in insurance coverage, which hit middle- and low-income Americans hardest, meant higher medical bills for U.S. families. The typical family of four with employer-based coverage saw its total monthly health care tab almost double between 1999 and 2009 - from $805 to $1,420 - researchers at the Rand Corp. found.

Over the same period, total monthly income grew only 30 percent, barely keeping pace with inflation, which pushed up prices 29 percent over the decade.

"Even a typical family with employer-provided insurance is just barely treading water," said David Auerbach, the lead author of the study, also published in Health Affairs.

Rising out-of-pocket medical bills were so corrosive, the study found, that they virtually wiped out income gains over the decade, leaving the typical family with just $95 more a month to spend on things other than health care in 2009, compared with 1999.

Some of the increased health care burden came from higher insurance premiums and increases for co-payments and deductibles.

But the Rand researchers calculated that families were also paying more indirectly. Employers spent more on health benefits, rather than offering their workers bigger paychecks.

Families took yet another hit as the share of their state and federal tax bills that went to support government health care programs such as Medicare and Medicaid also rose over the decade.

The Rand and Commonwealth Fund researchers said the new health care law that President Barack Obama signed last year could bring some relief, particularly to Americans without adequate insurance who will qualify for subsidized insurance starting in 2014.

That could reduce the number of underinsured adults as much as 70 percent, the Commonwealth report concluded.

While projected Medicare savings will help offset some of the costs of providing subsidies to millions of Americans, however, new tax hikes built into the law could also indirectly further inflate the typical household's medical tab.

Noam Levey writes for the Tribune Washington Bureau.

Read more: http://www.mcclatchydc.com/2011/09/08/123446/health-care-costs-rose-while-insurance.html?storylink=MI_emailed#ixzz1XNTXJdem

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[+3] - JPB - 09/27/2011Speaking of Paul Ryan... He's back at it with his voucher concept. [quote]Employer healthcare tax breaks would be replaced with refundable tax credits for individuals under a proposal offered...

@BumbleBeeBoogie,

The Price We Pay for Medical Care
By REED ABELSON

Americans seem to be paying the price for the unrelenting rise in health care costs in this country, according to several studies being published on Thursday in Health Affairs, an academic journal.

The higher cost of coverage has taken a huge cut in the increase in income earned by the average family, says one study, and lower-income families are particularly hard hit, according to another. Meanwhile, the numbers of people who cannot afford insurance or do not have enough coverage have significantly increased, according to a third study.

In an analysis of just how much of a family’s paycheck is being gobbled up, analysts from Rand looked at how much of the average increase in a family’s gross annual income over the past decade has gone to pay for health care.

While the family saw an increase in income from $76,000 a year in 1999 to $99,000 a year in 2009, the researchers then deducted what they estimated would go to pay for insurance premiums, deductibles and co-payments and taxes to support Medicare and Medicaid. By the Rand calculation, if the cost of health care had been in line with overall inflation, the average family would have had nearly $5,400 in additional income a year that they could have spent.

The bottom line: Americans have less and less money to spend “on everything else” because they are forced to devote so much of their income to health care.

The authors conclude: “Given the perilous state of the US economy, the fiscal burdens imposed on ally payers by steadily rising health care costs can no longer be ignored.”

In a second study, researchers make the case that lower-income families are even more burdened by the high cost of medical care than those who are better off. Patricia Ketsche, a researcher from Georgia State University, and others calculated that low-income families pay more than 20 percent of family income toward health care, looking at both private spending and taxes, while other families who make more pay no more than 16 percent of their family income.

A third analysis looks at the unaffordability of health care by estimating how many people were without adequate coverage in 2010. The study, by the Commonwealth Fund, estimates some 29 million Americans were underinsured and about 52 million were or had been recently without coverage. Those 81 million adults compare to an estimated 75 million in 2007 and 61 million in 2003.

While the Commonwealth study suggests the federal health care law has the potential to significantly lower the number of people with insufficient or no coverage, the researchers also emphasize the need to reign in health care costs. “To ensure that premiums and care remain affordable, efforts to slow rising costs of care and reduce waste, duplication, and care of little value must intensify,” they say.

The September issue of Health Affairs is focused on health care costs, and the two studies that look at how American families are affected are available online for a week and afterwards by subscription. The Commonwealth Fund report will remain available on-line without a subscription.

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@BumbleBeeBoogie,

August 2, 2011, 6:18 pm
Mercer Issues Employer Survey on Health Coverage
By REED ABELSON

Employers continue to say they plan to keep offering health care coverage to their workers, even after all of the provisions of the federal health care law take effect in 2014, according to a new survey by the benefits consultant Mercer. The new law has already succeeded in modestly expanding coverage, the survey found.

Since the law’s passage a little more than a year ago, enrollment in employers’ health plans climbed by about 2 percent, on average, as a result of the new requirement that companies had to offer coverage to their workers’ dependent children up to age 26, according to the Mercer survey.

The employers say they expect enrollment to increase by another 2 percent in 2014 when they are required to automatically enroll new full-time employees into their plans. Mercer surveyed nearly 900 employers last month.

As my colleague, Milt Freudenheim, recently noted, the question of what exactly the nation’s businesses will do when faced with the full impact of the law’s provisions has been the subject of much political debate. A report by McKinsey & Company, a management consulting firm, set off significant debate, according to the June article, by finding that nearly a third of employers would definitely or probably drop coverage for their workers when provisions of the law took effect in 2014. The McKinsey report’s methodology was questioned and criticized.

And just last week, the Republican-controlled House took up the question of what effect the law would have on employers in a hearing, “Impact of Obamacare on Job Creators and Their Decision to Offer Health Insurance.”

The Mercer survey found no such employer revolt. Just 2 percent of those surveyed said they were “very likely” to drop coverage, while only 6 percent said they were “likely” to.

“Employers have spent the past year studying the new law and developing strategies to deal with the increased costs and administrative burdens,” said Beth Umland, director of research for health and benefits at Mercer, in the release. “But they don’t seem to have changed their minds about the value of continuing to offer their employees health coverage.”

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@BumbleBeeBoogie,

April 13, 2011, 9:22 am
How to Mend Medicare
By KATE PHILLIPS

Changes to Medicare may seem ever more likely, with President Obama expected on Wednesday to talk about ways to lower the deficit and eke savings out from entitlement programs. He is speaking just a week after Republicans laid out a proposal that would privatize Medicare, the insurance program for people over 65.

In an article published in The Times on Wednesday, Robert Pear outlines ways that Medicare could be altered, or re-engineered. He lists these leading proposals:

¶Increase the age of eligibility for Medicare to 67, from 65.

¶Charge co-payments for home health care services and laboratory tests.

¶Require beneficiaries to pay higher premiums.

¶Pay a lump sum to doctors and hospitals for all services in a course of treatment or an episode of care. The new health care law establishes a pilot program to test such “bundled payments,” starting in 2013.

¶Reduce Medicare payments to health care providers in parts of the country where spending per beneficiary is much higher than the national average. (Payments could be adjusted to reflect local prices and the “health status” of beneficiaries.)

¶Require drug companies to provide additional discounts, or rebates, to Medicare for brand-name drugs bought by low-income beneficiaries.

¶Reduce Medicare payments to teaching hospitals for the cost of training doctors.

Last week, our readers expressed their views on privatizing Medicare. Of the changes listed above, which seem most likely to help contain costs and be palatable to the public — and, especially, to Medicare recipients?

(Mr. Obama’s speech about the deficit is at 1:30 p.m., at George Washington University.)

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Quote:

Thank you, boss?: While the annual cost for employee family health insurance jumped 9% this year, employers shouldered the bulk of that increase, according to a new industry survey Tuesday.

For insured workers, it cost $15,073 this year to buy health insurance for a family of four. That was up sharply from $13,770 last year, according to the Kaiser Family Foundation report.

But the good news for these employees is that their share of the total cost rose a little more than 3% to $4,129 while their boss' share jumped 12% to $10,944.

The report also showed that premiums for family coverage rose much faster than both general inflation and workers' wages.

That's what makes this year's 9% increase in premiums "especially painful for workers and employers struggling through a weak recovery," Kaiser president and CEO Drew Altman said in a statement

http://finance.yahoo.com/news/Family-health-insurance-cost-cnnm-3765962399.html?x=0&.v=2

I think it is safe to say that incomes are going down, assuming that the 9% increase in premiums roughly translates into a 9% increase in running our healthcare system we have a real problem. We already spend much more on healthcare tha we can afford, and the problem is getting worse at the rate of cost greater than inflation by 300%??!! THat **** just does not work. Obama missed the boat...THIS is the problem that he needed to be working on, not getting more people insurance.

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@hawkeye10,

Quote:

Half of workers at small firms with individual policies now face annual deductibles of $1,000 or more, compared with 16 percent of those workers in 2006. At large firms, the share has grown from 10 percent to nearly one-third.

“Without any real national discussion or debate, there’s a quiet revolution going on in what we call health insurance in this country,” said Drew Altman, president of the Kaiser Family Foundation, which conducted the annual survey of employers in conjunction with the Health Research & Educational Trust. “Health insurance is becoming less and less comprehensive. … And we expect that trend to continue.
.
.
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While premiums paid directly by workers have galloped ahead of both wage increases and inflation — rising 131 percent between 2001 and 2010 — employers have also generally shied away from drastically increasing the proportion of the premium they expect their workers to shoulder.

Instead employers are mainly coping with rising health-care costs by moving their workers into plans with higher out-of-pocket costs like deductibles, co-pays, and co-insurance.

“Employers have to make a choice. If the benefits are too rich, the cost of them will be high and all employees will be paying more out of their paycheck. This way the ones that are using the plan more will be the ones paying more,” said Beth Umland, Mercer’s director of research for health and benefits.

Still, the burden on workers and their families is becoming more widespread.

Peter Cunningham, a researcher at the Center for Studying Health System Change has found that about one out of five families with employer-sponsored insurance were spending more than a tenth of their income on out-of-pocket health care costs by 2008 (the most recent years for which statistics were available).

http://www.washingtonpost.com/national/health-science/survey-rising-health-insurance-costs-shifted-to-workers/2011/09/26/gIQASSpx1K_story.html?hpid=z1

Someone should have pointed out to Obama that getting people health "insurance" does not help people if they cant afford to use it.

1 Reply

@hawkeye10,

hawkeye10 wrote:

Someone should have pointed out to Obama that getting people health "insurance" does not help people if they cant afford to use it.

Affordable insurance such as Medicare and Medicaid also don't help if noone accepts it. The solution might be to require that everyone be insured, and that all doctors and other providers will accept the coverage at a prescribed level of compensation. If this is where we want to go, we'll soon be faced with the prospect of telling college students which ones are going to be doctors, etc., because nobody capable of meeting the requirements of medical school is going to be dumb enough to go there.

1 Reply

@roger,

Quote:

Affordable insurance such as Medicare and Medicaid also don't help if noone accepts it

Only slightly better is only when only the worst and most desperate for customers doctors will take your insurance.......

There are no short cuts, broken medical systems need to be fixed, Obamacare was a feel good "see we are doing something!" diversion from the core problems of the American medical system.

1 Reply

@hawkeye10,

I notice that when we speak of the costs of Obamacare, what we are really talking about is the government's cost. Individual premiums to be announced. Any discussion of premiums is usually blown off by muttering something about "exchanges" and giving somebody vouchers. Wonder how that's actually going to work out.

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@roger,

Obamacare has vouchers? I thought that was Ryan's proposal...

2 Replies

@roger,

roger wrote:

I notice that when we speak of the costs of Obamacare, what we are really talking about is the government's cost. Individual premiums to be announced. Any discussion of premiums is usually blown off by muttering something about "exchanges" and giving somebody vouchers. Wonder how that's actually going to work out.

That is how the Question got framed during the debate...you heard me talking on A2K about how the number we needed to be looking at is the nations total bill every year for health care and what quality care we get in return, but I was the only one. As soon as Obamacare came down the pike we saw its promoters doing the classic American maneuver of "hide the true cost". We ended up with the nonsense line that getting 30 million people (or whatever the number was) more health care was going to save money, which even to this day Obama will put out there because the American people never call "BULLSHIT!"

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@JPB,

Speaking of Paul Ryan... He's back at it with his voucher concept.

Quote:

Employer healthcare tax breaks would be replaced with refundable tax credits for individuals under a proposal offered on Tuesday by House of Representatives Budget Committee Chairman Paul Ryan.

In a speech to Stanford University's Hoover Institution in California, Ryan said his measure, which would effectively dismantle the way most Americans receive medical coverage, should be part of any Republican plan to replace President Barack Obama's healthcare overhaul.

Ryan's proposal is certain to draw fire from Obama's Democrats and has little chance of advancing in Congress before the 2012 presidential and congressional elections.

Eliminating healthcare tax breaks for business would likely encourage most companies to drop their employer-sponsored plans. That was an argument Republicans used against Obama's healthcare overhaul.

But Ryan said his plan would put patients more in control of their healthcare and go a long way toward reining in soaring healthcare costs.

"By putting the power into the hands of individuals, we can let competition work in healthcare just as it does everywhere else," Ryan said.

The new proposal is likely to revive the political controversy surrounding Ryan's proposal to phase out government-run Medicare and give subsidies to the elderly to purchase coverage from private insurers.

Ryan's earlier plan to privatize Medicare, a popular healthcare program for the elderly, contributed to Democrats scoring an upset victory in a special House election this year in a traditionally Republican district in New York.

A similar proposal to end tax breaks for employer-sponsored healthcare hurt Senator John McCain's 2008 run for president against Obama.Source

To me it simply drives home the message that Paul Ryan is a young, healthy American with a good employer-provided (govt) insurance plan who has never had to deal with insurance companies. The man is truly clueless about the reality of dealing with the "open market" of insurance providers if he thinks they are the answer to the problems of the cost of medical care.

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@JPB,

You're probably right. I do know that Ryan trotted out the concept regarding Medicare reform, and had something to offer for those unable to afford the cost. In both cases, I had the feeling they were just trying to brush aside inconvenient questions.

For crying out loud, if it's going to cost more in time or money, honest people wouldn't be afraid to say so.

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Health care costs rose while insurance coverage fell, studies show

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