By Liv Osby, The Greenville News
October 1, 2006
As someone who sees clients without health insurance struggling every day at the state Department of Social Services, Lidiya Williams feels lucky to have coverage for herself and her 3-year-old daughter.
But paying for that insurance is taking up a larger chunk of her paycheck, and there’s little left for savings or anything else at the end of the month.
And Michelle and Bill Reeves of Simpsonville, who have a child with a chronic illness, have watched their premiums expand every year while their benefits shrink.
“It’s crazy,” Michelle Reeves said. “It not only has impacted our ability to save, any money we did have saved we had to take out of savings to pay for medical bills.”
Health insurance premiums grew 7.7 percent this year, more than twice as fast as wages, which barely kept pace with inflation, according to a report from the Kaiser Family Foundation and the Health Research & Educational Trust.
Since 2000, premiums have increased 87 percent while wages grew just 20 percent. Co-payments and deductibles have also increased.
“It keeps rising, but the paychecks don’t,” said Williams, 27, of Greenville. “It’s awful.”
Besides growing premiums, rising out-of-pocket limits have dogged the Reeves family as well. Co-pays for visits to specialists, for example, went from $15 to $30, she says, and one of eight medications her son needs went from $15 to $50.
Because of these costs, the family has had to cut back on expenses, ranging from a dinner out to a new pair of shoes for the kids. They’ve also had to dip into the retirement fund and reduce charitable spending, said Reeves, 41.
“Now we have to make the choice: Do we get a prescription or an outfit for one of the kids?” she said. “It’s heartbreaking.”
Kaiser Vice President Gary Claxton said the nation has seen large premium increases over the past several years.
“And when you have to set aside money for health insurance and other expenses, it means there is less to spend on other things,” he said. “It’s particularly hard on lower-income people.”
The Kaiser report released last week also found that:
On average, workers are paying $259 more this year than they did last year toward the cost of family health coverage, or $1,354 more than in 2000.
Workers at small firms (with three to 199 employees) on average contribute significantly more for their family coverage premiums than those at large firms — $3,550 compared to $2,658.
Half of all companies that offer coverage say they are likely to increase the portion employees pay for insurance again next year.
Insurance hikes that outpace the growth in wages will force more people onto the rolls of the uninsured, said Jack Hadley, principal research associate with The Urban Institute.
“It’s more and more expensive for people at work to buy insurance through their employer, and as a result fewer people will buy it and fewer employers will offer it,” he said.
“Employers are being squeezed and employees are being squeezed — everybody is looking for a way to do the same thing with less money,” said Frank Knapp, president of the South Carolina Small Business Chamber.
“Health-care premiums have shot up so much, and income is stagnant,” he said. “The bottom line is nobody can keep up.”
Another report released last week found that seven of 10 workers worry their out-of-pocket health care costs will increase over the next three years, and more than half fear their benefits will be reduced as well. The survey of more than 12,000 employees by Watson Wyatt, a global human resources consulting firm, also found health benefits are an important inducement for employees to stay at their company.
While Claxton said insurers’ main objective is “not to maximize the number of people to insure, it’s to maximize profits to shareholders,” Karen Ignagni, president and CEO of the trade group America’s Health Insurance Plans, issued a statement saying this year’s increase was the lowest in years thanks to cost-containment strategies.
“Health insurance plans’ tiered prescription drug formularies, cutting-edge disease management and prevention programs, and important investments in health information technology are helping consumers get the care they need while taking unnecessary costs out of the system,” she said.
Nonetheless, Ignagni said more needs to be done — for instance, reimbursement based on quality health care and evaluating expensive new technologies for cost-effectiveness.
The problem of rising health-care costs and shrinking benefits is about the biggest issue that Americans write Consumers Union about, said Bill Vaughan, senior policy analyst for the group.
“What’s so awful is that as Americans we pay about 80 percent more than any other industrialized nation for health care,” he said, “and it makes up about 16 percent of our gross domestic product, and the closest societies, Canada and Switzerland, are at 11 percent, and they insure all their people.”
“We pay so much and get relatively little,” he added, “we’ve got to get a better deal for consumers out of this.”
Williams says unless workers start earning enough to pay for premiums or those premiums start going down, the country needs to move toward universal health care or some kind of regulation of the industry.
“With these increases, children are going to suffer and parents are going to suffer. It will affect the whole community,” she said. “They’re going to have to do something. Otherwise, poverty is going to keep rising.”