May 05, 2006
The Insured: A Primer
After my Uninsured primer earlier this week, I had a few requests to compile a profile on those with insurance. This is also my last day blogging, so I figured a round up of my favorite health policy issue is appropriate.
Insurance has seen substantial changes and shifts in the last five years, and these are due to the explosive growth of health spending. As costs rise ever further, employees are hurting. The pain is dual -- due to delayed treatment for illness or lost coverage for various procedures, as well as a hole in the pocketbook that's become meteor-sized.
The basic facts:
• The average annual cost for insurance in 2004 was $3,695 for individuals and $9,950 for families.
• Employer-sponsored premiums are growing at an immense rate: 8.2% in 2000, 10.9% in 2001, 12.9% in 2002, 13.9% in 2003.
• The average monthly premium for individuals from 1988 to 2004 has increased from $8 to $47, for families it has increased from $52 to $222. While that increase seems significant, the percent contribution has hardly gone up : in 1988 the $8 contribution was 11% of the total premium cost; today the $47 is 16% of total premium cost. And for families the 1988 amount was 28%; the current amount is 29%. The stats essentially tell us that while the percent employees are contributing has remained steady, the total cost has increased greatly to both the employee and employer.
• The number of employers providing health insurance has dropped 9% in five years; from 69% in 2000 to 60% in 2005.
• For those who have to pay them, annual deductible size has greatly increased as well. For individuals they've increased by 60% in five years to $414, for families they've increased 67% to $861.
• The dollar amount of co-pays is increasing as well; for HMO participants the number paying at least $20 for office visits has increased from 1% in 1998 to 22% in 2004.
• The major problem with affordable health insurance right now is the total health spending increase, which is making premiums cost more and more every year. And as health expenditures are estimated to be $2.16 trillion in 2006, and are projected to rise to over $4 trillion in 2015, it's showing no signs of slowing. Per person health spending is $7,110 this year and is projected to increase to $12,320 by 2015. And unless you predict your wages will double during that time, be prepared to shell out more and more.
• Although many policy analysts encourage greater cost sharing in the form of higher deductibles and copays, the average insured person already pays 34% of their health costs out of pocket. Don't count on greater cost sharing to reign in the expected increase to solve our spending crisis. Americans can only afford so much more out of pocket without forgoing care altogether, which creates crises in worker productivity and absenteeism.
So there you have it. The major driver of higher premiums and employee contributions to health care is the increased cost of care itself. And while employees are putting ever more money away into their insurance premiums, they're paying no greater proportion of the total cost than they were in 1988. It's just gotten that much more expensive. With only 60% of employers now providing health care, we can only expect to see more cost sharing and dropped coverage, because costs are not slowing. In fact, they're expected to almost double in just nine years.
And that's why I started on the health policy venture in the first place -- these statistics are frightening. Health care has become a beast, and the United States is unsure how to restrain it from eating its weight in income every day.
But as the richest country in the world, surely every one of our citizens deserves comprehensive, affordable, and quality health care. And while I'm leaving blogging, rest assured I'll be out there working and thinking about the ways to tame the beast, everyday.
This is frightening!
Posted by: Adrock | May 5, 2006 4:11:49 PM
Thanks Kate - I think this is tremendously helpful. I suspect many insured people don't understand the whole picture, possibly only their own story. I'm mopst concerned that the numbers you present are averages, which means some people are carrying deductibles north of $1000 (and probably more).
But I do think this comes back to a question I don't hear a lot of good answers for from the single-payer crowd: I get that single payer will help reduce insurance costs and premiums, by increasing the pool. But premiums are rising because they are actually tagged to health care costs, and I don't hear a lot of detail around how we control (and especially reduce) those costs. In order for single payer to really take hold, it seems to me, there needs to be some sense about how it improves cost management.
So that's my question: what gets reduced? Hospital costs? Doctor costs? Service costs? Because I'm not sure I see big savings in single payer (just as an organizing principle) in a lot of this. Not without some fundamental reordering of the systems for delivering care. And that discussion seems essential to the health care debate, and is every bit as painful as the question of insurance. At least from what I can tell.
Again, thanks. I hope you'll be able to post some thoughts somewhere to keep this discussion going.
Posted by: weboy | May 5, 2006 4:22:25 PM
The answer is simple: you really do see big savings in the healthcare systems of the non-US developed world.
Please to see the NY Review of Books table I excerpt at http://www.bignose.org/blog/?q=health_care_costs Sure, the numbers are a few years old, but they illustrate. In 2002, the French got better healthcare outcomes for under $3k per capita, while the US got worse ones for over $5k.
Further, we don't want to restrain the growth of "costs" if they represent actual care. Your health really is all you have in this world. Better care just costs more, since Moore's law doesn't work in medicine. That France might in ten years spend as much per capita on healthcare as the US does now shouldn't worry the French. They should welcome the better care they're getting, and make up for any "missing" production with ten years worth of productivity improvements.
Posted by: wcw | May 5, 2006 5:18:05 PM
It isn't as if the legislators are unconscious all this time. Way back in 94 I recall health care premiums paid to the government plan assessed as to effect on Canada's competitive position for the forerunner of NAFTA : the U.S. Congress decided it was a point in Canada's favour.
Posted by: opit | May 6, 2006 12:57:00 AM
A few questions that no one seems to bother asking:
1. Why do some people pay only about $1000/yr for health insurance, well below the average?
2. Why in some states is it impossible to get inexpensive insurance with higher deductibles? (New Jersey for example)
3. What's wrong with high deductible (say $2000 per person per year) insurance if it only costs $80 a month?
4. What percentage of the population genuinely can't afford $80/month and what percentage of this population would exceed that $2000 deductible year after year?
"Per person health spending is $7,110 this year and is projected to increase to $12,320 by 2015."
An average in this case is misleading if most of the health care spending is incurred by a small population (which it is). A median would be useful here. An average is not.
Posted by: David Andersen | May 6, 2006 1:49:33 AM
"Why in some states is it impossible to get inexpensive insurance with higher deductibles? (New Jersey for example)"
Because courts have ruled over and over again that if you offer health insurance, you have to offer the whole whiz bang package with all the bells and whistles.
The courts consider this an all or nothing. YOu have to either sell full blown, comprehensive health care coverage, or nothing at all.
Absolutely stupid, but par for the course in terms of unnecessary judicial intrustion on our lives.
Posted by: joe blow | May 6, 2006 7:17:46 PM
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