Health Care Premiums Rose 4.3 Times Faster Than Earnings in California
By: Health Insurance
Submitted: 2009-09-18 10:35:00 | Word Count: 783
Family health care premiums rose an estimated 4.3 times faster than earnings for California’s workers from 2000 through 2009, according to a report issued today by the consumer health organization Families USA. In that 10-year period, family health insurance premiums rose by 109.2 percent, while median earnings rose by only 25.5 percent.
The Families USA report for California is an update of its original ground-breaking 2006 report, which was the first of its kind to document these changes on a state-specific basis. Among the new report’s key findings are:
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* For family health coverage provided through the workplace in California, the average annual health insurance premium (employer and worker share of premiums combined) in the 2000-2009 period rose from $6,227 to $13,026—an increase of $6,799, or 109.2 percent.
* Between 2000 and 2009, the median earnings of California’s workers rose from $25,740 to $32,304—an increase of $6,564, or 25.5 percent.
As the report notes, the disproportionately high increases in insurance premiums have continued despite employees receiving “thinner coverage”—coverage that offers fewer benefits and/or that comes with higher deductibles, copayments, and co-insurance. Other employers have cut costs by placing limits on which employees are eligible for coverage or by eliminating coverage for spouses and children of employees. As a result, California families are paying more but receiving less in health coverage.
“Rising health care costs threaten the financial well-being of families in California and across the nation,” said Ron Pollack, Executive Director of Families USA. “If health care reform does not happen soon, more and more families will be priced out of the health coverage they used to take for granted.”
An even worse downside of rising costs is the loss of health coverage altogether. Between 2000 and 2008, the total percentage of U.S. firms offering health coverage declined by 6 percentage points—from 69 percent of firms to 63 percent—with small businesses being the most likely to drop coverage.
Another potential catastrophe for families is the possibility that they will join the growing ranks of families filing for bankruptcy because of their medical debts. Prior to filing for bankruptcy, families attempt to balance budgets by dropping phone service, trimming food costs, and going without needed medical or dental care. Despite these desperate measures, however, more than half of all bankruptcies are related to medical costs.
Key findings in the report make clear how the burden of rising health care costs is being shared by employers and employees for both family health coverage and individual coverage. Among those findings:
* For family health coverage in California, the employer’s portion of annual premiums in the 2000-2009 period rose from $4,683 to $9,418—an increase of $4,735, or 101.1 percent.
* For family health coverage, the worker’s portion of annual premiums rose from $1,544 to $3,608—an increase of $2,064, or 133.6 percent.
* For individual health coverage, the employer’s portion of annual premiums rose from $2,013 to $3,763—an increase of $1,750, or 86.9 percent.
* For individual health coverage, the worker’s portion of annual premiums rose from $352 to $787—an increase of $435, or 123.4 percent.
“For America’s businesses and families, the absence of health care reform is unaffordable and unacceptable,” said Pollack. “It will mean that businesses have a harder time staying competitive, and more and more families have to cope with stagnant wages and the loss of affordable health coverage.”
Pollack cited four of the many causes of skyrocketing health care premiums: wasteful health care spending, an almost-unregulated insurance market, a dramatic drop in competition in the insurance market, and cost shifts from the uninsured, termed a “hidden health tax.”
“All of these issues can be addressed in a comprehensive reform of our health care system that will allow businesses and families to afford quality health coverage,” Pollack said.
The Families USA report is based on data from the U.S. Census Bureau, the U.S. Department of Labor, and the U.S. Department of Health and Human Services.
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