Los Angeles Daily News
"Health insurance funk"
By Brent Hopkins
Staff Writer
Thursday, September 09, 2004 - The cost of employer-paid health
insurance jumped an average of 11.2 percent in 2004, the fourth
straight year of double-digit increases, with both businesses and
employees feeling the strain, according to a survey released
Thursday.
Small businesses, with less market power to contain costs, have been
particularly hard hit, according to the study by Kaiser Family
Foundation and Health Research and Educational Trust, nonprofit
health-issues groups.
Since 2001, costs have risen approximately 59 percent, causing
employers to insure 5 million fewer workers. And as costs increased
this year, wages have risen only 2.2 percent, making it increasingly
difficult for individuals to cover their insurance bills.
Employers have limited control over costs, ranging from raising
employees' portion of premiums to dropping coverage altogether, and
the researchers found few solutions to the problem.
"It really makes insurance an unaffordable investment for employers
and for employees," said Jon Gabel, vice president of the
Washington, D.C.-based Health Research and Educational Trust. "The
whole idea we've had, that if you have a job, you have health
insurance: That's not true today, and it will be decreasingly true
in the future."
The impact is greatest for families who can least afford health
care, the survey shows. The average cost to insure a family of four
is nearly $10,000, which is roughly the annual income for a
minimum-wage worker. For the costs shared by employers and
employees, the average cost of a family plan has hit $9,950, while
single coverage climbed to $3,695. Family coverage under preferred
provider organizations, or PPOs, rose to $10,217, up from $9,317 a
year ago.
"Fewer people can afford to get their health insurance," Gabel said.
"It's a burden on the economy and probably slows down employment
growth. If the cost is absorbed by the employer, it makes it more
difficult for us to compete in an international economy. If it's
absorbed by the employees, their standard of living is going down."
In the past four years, Gabel said, health care companies have been
passing along costs of technology, pharmaceutical companies and
hospital care to insurers. As a result, consumers have seen higher
deductibles, higher prescription drug costs, increased monthly
payments and higher co-payments.
The California Nurses Association blamed the high costs on hospital
markups, which spokesman Charles Idelson said average 355 percent in
California. With more-expensive coverage forcing people off
insurance rolls, he said more of the burden would be shifted to the
already-troubled emergency-care sector.
"Our concern is that we're long overdue for meaningful health care
reform," Idelson said. "It's not the hospitals that are victims.
It's not the HMOs. It's the general public who's deprived of medical
care as a result of the outrageous health care costs."
Businesses of all sorts have already felt the sting and are braced
for future hikes. Even workers who are eligible for semisubsidized
coverage at Santa Monica-based Fatburger Corp. often choose to opt
out, said President Keith Warlick. Managers and executives,
including himself, have the option to be covered, he said, and the
company tried to offer health insurance to all employees but found
few takers because of the cost.
"Our hourly workers didn't want to participate, because they wanted
the money themselves," he said. "They're young. They figure they're
not going to get sick, so they choose not to be covered."
Other companies chose to pass increases on to workers or shopped
around for cheaper coverage.
Nancy Hoffman Vanyeck, chief executive officer of the Mid-Valley
Chamber of Commerce, said she not only has seen her members struggle
with cost increases, but the higher prices have caught up with her
four-person office, as well. After years of covering all of her
workers' costs, she reluctantly began asking them to contribute
earlier this year.
"This is what we do for a living, so at least we understand it," she
said. "I've never had to say people had to pay 25 percent of their
insurance before. It was a huge hook for us to attract new employees
before."
Health insurers agreed that costs continue to skyrocket, which they
blamed on increased costs of technology and hospitalization. Michael
Chee, a spokesman for Thousand Oaks-based Blue Cross of California,
said costs would likely continue their climb as baby boomers retire
in large numbers.
"They can afford to pay for it, but can the system handle the
demand?" he said. "That's what we don't know about the future.
There's no easy solution, because no one's figured out a good way to
control costs. Unfortunately, there's no good solution at hand."
l=8s=8Brent Hopkins, (818) 713-3738 [email hidden]
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MikeV.