Study: Health Costs Up, No Matter How You Buy

By Emily Canal

American families have seen a rise in health care costs, such as deductibles and copayments, in the past four years whether coverage is purchased through an employer or directly from an insurance company, according to a study released last week by Department of Health and Human Services.

Families with PPO plans purchased from employers saw an average increase in deductibles of 30 percent in that time period, the report states, and those who purchased coverage on the open market "face deductibles that are more than two times greater than families with employer-sponsored PPO plans."

The study also found that thirty-seven percent of low-income individuals with private coverage spend more than 10 percent of their household income on health care. Twenty-two percent of middle-income individuals spend the same, compared with the eight percent of high-income people.

In the report titled, “The Hidden Costs of Health Care,” researchers at the Kaiser Family Foundation, American Health Insurance Plans, and the Center for Financing, Access and Cost Trends, Agency for Healthcare Research and Quality detailed the increases in health care costs and argue that their findings demonstrate a need for health reform to control the high costs of health care.

“It doesn’t matter if you have insurance or not: when Americans go to the hospital or the doctor’s office, they are paying more and getting less,” Health and Human Services Secretary Kathleen Sebelius stated in a press release. “Every year, co-pays, deductibles and other expenses are taking a bigger bite out of the family budget and the American people are demanding reform.”

Families in the individual markets are seeing the same financial drains. Twenty-two percent of the household income for a middle-income family with individual coverage can be spent on health care. Some families in this category can spend up to 50 percent.

Families with deductibles for preferred provider organization plans purchased through small firms have seen the highest increase of 64 percent in two years, from $1,439 to 2,367. Larger firms also saw a jump of 30 percent, with deductibles rising from 1,034 to 1,344.

Copayments have also followed the pattern of rising health care cost. In 2004, one in five people with health insurance through an employer had a copayment of more than $25. By 2008, the figure jumped to one in three.

Comments

For profit private health insurance companies and their wealthy policy holders need to give up. The public option is the key to controlling healthcare cost.

The truth is: Medicare is no longer able to continue shifting health care cost to private health insurance customers. The Medicare population is growing, and doctors are not accepting Medicare payment nor new Medicare recipients at a pace to keep up with demand.

In 2002 the average cost of healthcare for every American, that is, each man, woman, and child, was $6280. The elderly, age 65 and over, made up around 13 percent of the U.S. population in 2002, but they consumed 36 percent of total U.S. personal health care expenses. The average health care expense in 2002 was $11,089 per year for elderly people but only $3,352 per year for working-age people, ages 19-64 (http://www.ahrq.gov/research/ria19/expendria.htm).

Working age people are paying higher premiums in large part due to this cost shifting. We need the public option to continue shifting the high cost of caring for the elderly to the young working population, that can afford health insurance.

Eventually most people can only afford the public option. Only then can we encourage doctors to accept lower Medicare-like fees while providing higher quality of care. We need our young middle-class work force, private health insurers, doctors, hospitals and other healthcare providers to give up, because resistance is futile.

Posted by: NorthMan | June 29, 2009 6:33 PM | Report abuse

Doctors are hooked on big money, drug companies offer life to the highest bidder and insurance corporations are unregulated greedy weasels that pay out as little as they can.
This is the American health care system.
Best in the world?

Posted by: seemstome | June 30, 2009 5:55 AM | Report abuse

Myth - "It will be very expensive to get good health to everyone."

Fact - Actually there's a way we can have better universal health care at no more than we are now paying (see 5. below). Here are the facts (cf. www.pnhp.org):

1. We waste $100 - $200 Billion a year on the high overhead of insurance companies.
2. We waste $200 - $300 Billion a year on doctors filling out forms for insurance companies.
3. I don't know the compliance cost of patients fighting with insurance companies, but it must also be in the 100's of Billions.
4. We pay the highest drug cost in the world to drug companies that spend twice as much on profit and three times as much on "marketing" as they spend on research. This is about another $100 Billion each year.
5. Because of the above, we could give Super Medicare (few limitations, no co-pays, no deductibles and complete drug, dental & mental coverage) to everyone at no more cost per person than we are now paying.

Other countries with single payer systems get better health care as measured by all the basic public health statistics and they do it at less than half the cost per person. If we build on our rotten system, we will get a health care system with rotten foundations.

Posted by: lensch | June 30, 2009 7:38 AM | Report abuse

Between the fiscal years 1997/98 and 2006/07, government spending on
health care grew on average across all 10 Canadian provinces at a rate of
7.3% annually, compared to 5.9% for total available provincial revenue, and
5.6% for provincial economic growth (GDP). This means that the Canadian
government’s spending on health care is growing faster than the government’s
ability to pay for it.

Posted by: openwide | July 2, 2009 11:58 AM | Report abuse

As a licensed insurance agent in Illinois, I can tell you for fact that nearly 100% of my clients do NOT want a government health care plan for themselves or family and I don't want one for my family or self either ... unless of course, it is identical to the one that our elected government officials in Washington, DC have!

Posted by: EdwinTazelaarII | July 3, 2009 5:54 PM | Report abuse

The comments to this entry are closed.