HealthLawProf Blog

Editor: Katharine Van Tassel
Akron Univ. School of Law

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Monday, May 5, 2008

Health Insurance Costs Up

The New York Times had a front page article yesterday on the high cost of health insurance and the fact that employers are covering less and less of these costs.  Reed Abelson and Milt Freudenheim write,

Many of the 158 million people covered by employer health insurance are struggling to meet medical expenses that are much higher than they used to be — often because of some combination of higher premiums, less extensive coverage, and bigger out-of-pocket deductibles and co-payments.

With medical costs soaring, the coverage many people have may not adequately protect them from the financial shock of an emergency room visit or a major surgery. For some, even routine doctor visits might now take a back seat to basic expenses like food and gasoline.

“It just keeps eating into people’s income,” said James Corbin, a former union official who works for the local utility in Tucson.  Mr. Corbin said that under their employer’s health plan, he and his co-workers are now obliged to pay up to $4,000 of their families’ annual medical bills, on top of about $1,600 a year in premiums. Five years ago, they paid no premiums and were responsible for only about $2,000 of their families’ medical bills. “That’s a big jump,” Mr. Corbin said. “You’ve just lost a month’s pay.”

Already, many doctors say, the soft economy is making some insured people hesitant to get care they need, reluctant to spend a $50 co-payment for an office visit. Parents “are waiting longer to bring in their children,” said Dr. Richard Lander, a pediatrician in Livingston, N.J. “They say, ‘The kid isn’t that sick; her temperature is only 102.’ ”

The problem of affording health care is most acute for people with no insurance, a group expected to soon exceed 48 million, but those with insurance say they too are feeling the pain.

Since the recession of 2001, the employee’s average cost of an annual health care premium for family coverage has nearly doubled — to $3,300, up from $1,800 — while incomes have come nowhere close to keeping up. Factor in other out-of-pocket medical costs, and the portion of the average American household’s income that goes toward health care has risen about 12 percent, according to the consulting and accounting firm Deloitte, and is now approaching one-fifth of the average household’s spending.  In a recent survey by Deloitte’s health research center, only 7 percent of people said they felt financially prepared for their future health care needs. . . . .

“There’s a real shift in the burden of health care to people who happen to be sick,” said Paul B. Ginsburg, the president of the Center for Studying Health System Change, a research group in Washington.  Companies and policy makers have yet to focus on what the faltering economy means for employees’ medical care, said Helen Darling, president of the National Business Group on Health, a Washington association of about 200 large employers.  “It’s a bad-news situation when an individual or household has to pay out-of-pocket three, four or five times as much for their health plan as they would have at the time of the last recession,” she said. “Americans have been giving their pay raise to the health care system.” . . . .

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