September 26, 2008

As Financial Markets Crash, Insurance Premiums Continue to Rise and Put a Strain on American Families

"Even as Washington and Wall Street debate the best way to avert an economic disaster, increasing numbers of Americans are struggling with another financial crisis: the growing burden of unpaid medical bills." This first sentence of a New York Times' article Health Care Costs Increase Strain, Studies Find specifically describes an issue that many Americans may not realize during this tumultuous financial time--that the nation's economic downturn is having a significant toll not only on Americans' wallets but on their health as well.

The Commonwealth Fund states that "the federal minimum wage is now three dollars an hour lower, in real terms, than it was 40 years ago; gas and food prices are soaring; home values are declining; growth in health care costs is far outstripping income growth; and people are increasingly going without the protection of health coverage--nearly 9 million have lost their health insurance since 2000." As a result of these economic circumstances, more working families are struggling to pay their medical bills, accumulating medical debt, and are forced to make tough financial choices that often involves sacrificing needed health care and health insurance. Need a stat to put this issue into perspective? 41% of working-age adults, or 72 million people, reported a problem paying their medical bills or had accrued medical debt, up from 34%, or 58 million, in 2005 AND, in 2007, more than 28% of U.S. adults (an estimated 50 million people) were uninsured for some time during the past year.

Now, two new studies released September 24, 2008 by the Kaiser Family Foundation and the Center for Studying Health System Change, provide further evidence of the mounting strain that medical care is placing on working Americans...and these studies were completed earlier this year BEFORE the financial markets reached their current state of crisis! According to the studies, employees are paying an average of $3,354 in premiums for family coverage, more than double the amount they paid in 1999; and the total cost for family coverage now averages $12,680 a year. Due to these high insurance premiums, more and more families are unable to pay their medical costs and are therefore borrowing money to pay for these expenses or are opting not to have health insurance at all. In a study by the nonpartisan Center for Studying Health System Change, based on its national survey of households, nearly 1 of every 5 families had problems paying medical bills last year AND nearly 20% of those having difficulty said they considered declaring personal bankruptcy as a result of their medical bills.

Wanna know something else? Employees aren't the only ones affected by the increasing health insurance premiums....EMPLOYERS AND COMPANIES are affected as well! Almost all large employers offered coverage but only 62% of small companies did. Employees working for these big companies were also paying about $1,000 less a year for family coverage. So to deal with high-deductible premiums, employers of small companies are faced with the choice of dropping coverage altogether or asking their employees to pay much more in the form of deductibles and out-of-pocket expenses....many haven chosen the latter. A September 24 article in the Boston Globe says that in just ONE year, the percentage of workers enrolled in high-deductible insurance of $1,000 or more increased from 12% to 18%.

Let's give you a bigger picture to think about: insurance premiums have increased 119% since 1999, whereas workers' earnings have only increased 34% during the same time period and overall inflation increased 29%.

So what does this all mean? It means that high-insurance premiums are hitting both the INSURED and UNINSURED, and MUCH MORE needs to be done to make health care coverage more affordable for consumers and employers. In the Boston Globe article, Rep. Pete Stark, D-Calif., and chairman of the health subcommittee within the House Ways and Means Committee, says that "until we have universal coverage, these cost shifts away from insurers to consumers will continue."