By Ben Werner, The State
September 14, 2006
South Carolina workers can expect their health insurance premiums to jump by 9 percent to 11 percent next year.
Such increases — similar to the increase most experienced this year — are likely to be the norm as the cost of care continues to rise.
Yet — even with a recent slowdown in the rate at which insurance premiums have grown — wage increases are not keeping up with the escalating cost of health insurance, according to the Kaiser Family Foundation’s 2005 Annual Employer Health Benefits Survey.
On average since 2000, premiums for family coverage increased by 73 percent while wages grew by 15 percent.
To put this in perspective, a single parent paid the federal minimum wage was $168 shy of the $10,880 needed to pay the average annual family health insurance premium last year.
That employee finished the year with $10,712, working for $5.15 an hour, 40 hours a week for 52 weeks.
No surprise, then, the Kaiser survey also found 40 percent of American workers have no access to health insurance.
In South Carolina, an estimated one in five residents — about 850,000 people — do not have health insurance, a state Department of Insurance study found.
So, what’s expected next year?
Health insurance cost is what large businesses are most concerned about, while health insurance availability is the phrase that most often encapsulates the complaints of South Carolina’s small-business owners and their employees.
Large employers will continue searching for ways to control cost increases, such as increasing co-payments and deductible levels.
Meanwhile, many small businesses cannot find plans, or find that what health insurance options are available cost too much, said Frank Knapp, president of the S.C. Small Business Chamber of Commerce.
High-deductible health plans, Knapp said, help some employees afford health care, but alone these types of plans do not offer a solution to the availability of health care.
Gov. Mark Sanford wants to push health care savings accounts as a way to boost the number of insured South Carolina residents.
Proponents of these accounts say they offer participants a way to save money while they are put in control of the delivery of their health care.
Opponents point out that chronically ill people never get a chance to build up their accounts, and most health care delivery is dictated by health insurance providers anyway.
Knapp, though, has a plan endorsed by his membership and a growing number of legislators in the State House: Allow small businesses to buy into the state’s Medicaid program.
During the last legislative session, Knapp pushed for such a plan, which he said would cost the state about $112 million to set up. His idea was to pay for this by increasing the state cigarette tax.
Knapp estimates more than 100,000 South Carolina residents could benefit from this plan.
Sanford threatened to veto the legislation, if passed, because it was not revenue-neutral. Sen. Tommy Moore, D-Aiken, who is challenging Sanford in the Nov. 7 general election, has endorsed the idea.
“There is a definite chance this gubernatorial election will change the availability of health insurance to small businesses,” Knapp said.
Knapp’s organization is part of a growing number of small-business groups that do not see a proposed fix to health care availability coming from Washington.
So-called Association Health Plans ostensibly would help small businesses offer insurance by allowing groups to pool their purchasing power to get the same types of deals on coverage offered to large employers.
The National Federation of Independent Businesses supports these plans, but Knapp does not think they will work, and neither does BlueCross BlueShield of South Carolina.
An Association Health Plan would reduce health care costs by providing savings from the administration of these health benefits, said Will Shrader, vice president and chief actuary for BlueCross BlueShield of South Carolina.
But, “it’s a false promise,” he said, because the costs would be the same. And there is a danger that some companies would gain unfair advantages by being able to sidestep state regulations other insurance companies still would have to follow.
Premiums for the state health insurance plan will not increase in 2007. This plan covers state, local government and school employees, along with retirees and dependents.
The reason for no increase is health care inflation has moderated and the Legislature approved enough funding to cover any increases in health care in 2007.
The state spent $879.1 million during calendar year 2006 on health insurance. This money comes from various state, county, city and school districts that participate in the plan.
Reach Werner at (803) 771-8509.