Insurance costs rising faster than paychecks

Since the new millennium, Kansas health insurance premiums have risen 4.2 times faster than median earnings.

“Rising health care costs threaten the financial well-being of families across the country,” said Ron Pollack, executive director of Families USA, a national organization for health care consumers. “If health care reform does not happen soon, more and more families will be priced out of the health coverage that they used to take for granted.”

On Tuesday, Families USA released its findings on 15 states, including Kansas, in a report called “Costly Coverage.” The report is based on data from the U.S. Census Bureau and the U.S. Department of Health and Human Services.

In Kansas, the report found:

• The average annual health insurance premium for family coverage rose from $6,237 in 2000 to $12,397 in 2009, or 98 percent.

• The median earnings of Kansas workers rose from $22,351 to $27,565, or 23 percent.

The state is about on par with the nation, which saw premiums rise 4.9 times faster than wages. Of the 15 states, Oklahoma had the lowest difference at 2.8, and Alaska and Washington had the highest at 5.3.

Need for reform

“What is so surprising about these increases, is that these premiums now purchase thinner coverage,” Pollack said, referring to higher deductibles, higher co-payments and less benefits.

“For America’s businesses and families, the absence of health care reform is unaffordable and unacceptable. It will mean that businesses will have a harder time staying competitive and more and more families have to cope with stagnant wages and loss of health coverage.”

In Kansas, employers are footing the largest chunk of the increase.

The employer’s portion of annual premiums for family coverage rose from $4,353 to $9,260, or 112 percent. Meanwhile, the worker’s portion grew from $1,884 to $3,136, or 66 percent.

The findings come as no surprise to small Lawrence business owner Margie Wakefield, who provides health insurance for two full-time employees and her family. She said her premiums go up every year without explanation.

“The insurance company is completely in control,” she said. “It doesn’t matter how long you’ve been a customer or how little you’ve used the service. It makes no difference. You play by the rules. You do everything right, and you still get penalized.”

Growing costs

Pollack said there are a few key reasons for the rising costs of health care, which ultimately end up in premiums. These are:

• Greater use of health care services.

The United States is treating more people with common chronic conditions. In 2005, nearly half of Americans had at least one chronic condition, and care for chronic conditions accounts for three-quarters of U.S. health spending, with diabetes alone costing more than $174 billion annually.

• An insurance market without necessary protections.

According to Families USA, companies are governed by a hodgepodge of state and federal rules. In many states, companies have free rein over how much of each dollar they collect in premiums is retained as profit or spent on overhead. In some markets, insurers are free to charge people more or deny coverage.

• There’s been a consolidation of insurance companies, which means less competition. A 2008 study found that in 44 percent of major metropolitan areas, a single insurance company controlled half or more of the market.

• Costs are being shifted from the uninsured to insured.

The Census Bureau announced last week that there were 46.3 million people without health insurance in 2008, and 330,000 people in Kansas.

“Insurance premiums significantly are affected by the large number of people who are uninsured,” he said. “When an uninsured person goes to the emergency room and gets care, somebody has to pay for it and guess who pays for it? You and I pay for it if we have health insurance.”

He said it’s known as the “hidden health tax” and in 2008, that tax increased premiums for family health coverage by an average of $1,017.

Pollack said these are a few of the reasons that health care reform must happen.

“We have experienced this growing crisis in terms of costs and more and more people joining the ranks of the uninsured for a long, long time,” he said. “I mean this is not something where people are acting precipitously. There have been proposals made and hearings conducted for many years about the need for health care reform.

“If we do not achieve meaningful health care reform, then costs will continue to skyrocket, more businesses will find costs unaffordable, families will be priced out of health care and more and more people will lose health coverage. So, the time for really doing nothing or going slow has passed.”