- TUESDAY, April 29 (HealthDay News) — Employer-based health insurance
premiums have skyrocketed at a pace that far exceeds the rate of American
wage increases since 2000, a new study reveals.

According to an analysis of government statistics being released
Tuesday by the Robert Wood Johnson Foundation (RWJF), the average dollar
amount employees must pay per year for family health coverage went up by
30 percent from 2001 to 2005. During that time, incomes increased by just
3 percent.

“Nationally, insurance premium costs are going up ten times faster than
people's incomes,” said RWJF spokesman Michael Berman. “And in some
regions, the gap is even greater. So what we've tried to do with this
report is highlight for the nation's leaders what families already know;
that it's getting harder and harder to afford health insurance in
America.”

The report is a state-by-state analysis of insurance coverage costs
relative to income from the State Health Access Data Assistance Center
(SHADAC), which is part of the University of Minnesota's School of Public
Health in Minneapolis.

It was released as part of the organization's launch of its sixth
annual “Cover the Uninsured Week,” a nonprofit, non-partisan effort to
increase awareness about insurance coverage issues. The campaign will be
comprised of RWJF-sponsored health fairs, health insurance seminars, press
events and community outreach programs across the country.

RWJF notes that currently 47 million Americans are uninsured, of whom
almost 9 million are children.

In 2007, national health-care costs are estimated to have risen by 6.9
percent — or two times the rate of inflation, according to the nonprofit
National Coalition on Health Care (NCHC). While the RWJF notes that
health-care spending now accounts for 16 percent of the nation's gross
domestic product (GDP), the NCHC projects that by 2016 that figure will
rise to 20 percent.

Similarly, the NCHC indicates that in 2007, employer health insurance
premiums also rose at twice the rate of inflation — by 6.1 percent.

The RWJF report is based on data drawn from the U.S. Agency for
Healthcare Research and Quality's Medical Expenditure Panel Surveys,
conducted between 2001 and 2005. SHADAC researchers also crunched numbers
from U.S. Census Bureau information collected between 2001 and 2007.

The study's premium-to-income comparisons demonstrate that employees
with health coverage are not, in fact, paying a greater proportion of
their total family premiums since 2000 — with employees continuing to
carry a 24 percent burden of the full cost.

However, the report indicates that between 2001 and 2005, there was a
30 percent national rise in what employees must now pay for family
coverage — translating into an additional average yearly out-of-pocket
expense of $664. In total, the average employee must now shell out $2,585
for family coverage.

Residents of some states actually experienced higher than average
premium increases, with the hardest hit states being Oklahoma, Idaho,
Texas, Oregon and Pennsylvania.

By contrast, the average income among Americans carrying family
policies went up just 3 percent –or about $1,250 — in the same
timeframe.

Employers, meanwhile, have seen their out-of-pocket share per family
policy rise 28 percent, to a 2005 average of $8,143. The result: 30,000
fewer employers offered their workers health coverage in 2005 than in
2001, translating into more than 4 million fewer private-sector workers
with jobs that offer health benefits.

“We're not trying to point the finger at anybody,” said Berman.
“Employers are paying more, employees are paying more, and costs are out
of control for everybody. So we all need reform, to address costs and also
to increase coverage. Because now, one in six Americans are uninsured,
which ultimately places a greater burden on all of us.”

Mark V. Pauly, a professor of health economics at the Wharton School of
Business at the University of Pennsylvania in Philadelphia, said he
believes the report paints a very complex problem with too broad a
brush.

“The state of health insurance today is a pretty gloomy picture,” he
said. “Particularly if you're a freelancer or working for a small
business. But the phenomenon of health insurance outpacing income or GDP
has been going on since the passage of Medicare in 1965. So, it's the same
old stuff. And I think this report is waving the bloody shirt to make it
look worse recently than it really is.”

“One of the major conundrums,” explained Pauly, “is that the cost of
insurance has increased as health spending has increased, primarily
because of the development of new medical technology, especially in terms
of drugs, which, as far as we can tell, is an expense worth the
money.”

“So the accurate story,” he said, “is that while the rate of insurance
cost growth has actually tailed off quite a bit in the last couple of
years, somewhere between 2000 and 2005, insurance premiums went up even
higher than usual — mostly because of increases in the cost of
prescription drugs. When prior to that generally prescriptions were not
covered. So you can't win by losing, since before that, people had to pay
for prescriptions out of pocket.

“The problem therefore is that consumers really want these benefits,”
Pauly said. “But they have a price tag that makes it especially hard for
lower-income people. So, we've got an unsustainable system, and we have to
find a better way to make health-care choices. But it's not going to be
painless.”

More information

For more on health insurance costs, visit the National
Coalition on Health Care.