Jen10122
03-17-2004, 05:59 PM
(March 17) - Nancy Sherman Soleimani fears dropping her $1,200-a-month health insurance policy almost as much as she worries about how she'll continue to pay for it.
Don Clingerman says his 62-year-old mother's retiree health coverage is so expensive - $7,900 a year - that he may recommend she drop it, gambling that she'll stay well until she's 65 and can get Medicare.
Hank Sturma, 60, says he's been without a job - and without insurance - for about a year. Sturma says he can't afford the $325 a month it would cost to add him to the policy his wife has through her job at a nursing home.
Rising health care costs are increasingly pressuring the middle class, adding a large and politically influential group to the category of those who fear they may soon have to do without.
There's little hope for relief in the short term. Health spending is expected to rise well above inflation for years to come. Employers are increasingly passing on the additional costs to their insured workers, causing some workers to opt out, saying they can't afford it. And, at some workplaces, employers are dropping coverage altogether.
For those who have to buy their own insurance - or those on the low end of the income scale - insurance has long been hard to afford.
"What this country is actually doing is gradually pricing the lower third of the wage and income distribution out of health care," says Uwe Reinhardt, a Princeton economist.
The success or failure of efforts to control health care costs in the next decade will determine whether those in higher income brackets are similarly shut out, he says.
Good Job, No Insurance
Harvard economist David Cutler estimates that if medical costs rise 5% above inflation for each of the next four years, at least 3 million more U.S. residents will be without coverage.
"We're setting ourselves up for a big implosion of the health care system," says Cutler, author of Your Money or Your Life: Strong Medicine for America's Health Care System.
Many of those will be workers with good jobs and decent pay.
"These newly uninsured Americans will be a different category of citizenry: solidly and continuously employed people who suddenly find themselves totally without a health care safety net because of soaring health care premium costs," say the authors of Epidemic of Care, George Halvorson, the CEO of Kaiser Permanente, and George Isham, medical director for insurer HealthPartners.
Today's average premium for a family insurance policy - $9,086 a year- already represents 21% of the national median household income of $42,409.
If insurance premiums continue to rise about 10% a year, today's average premium could double in just over seven years. Wages, however, are only expected to grow at about 3% a year.
Some analysts say the rising cost of premiums and increasing load of deductibles and other fees will lead more of the currently insured to drop their coverage.
"People will start playing roulette with their health insurance," says Glenn Melnick, professor of health care financing at the University of Southern California. "I can see a middle-class family saying, 'We need to cover Mom and Dad, but we'll let the kids go without and put that money into their college fund.' "
Clingerman, who lives in Reedsville, W.Va., says his family faces such a quandary. His 62-year-old mom is in good health and doesn't take any prescriptions. She is covered under a policy his now-deceased father had through a former employer. But the cost has rapidly risen to nearly $658 a month, which she pays out of her pension of about $800 a month. She will be eligible to enroll in Medicare in three years.
"My suggestion is she drop it," says Clingerman, whose own policy through his job costs him $20 a month. "It's a gamble, but that's what insurance is: a gamble."
Already, 19% of those whose household income is $25,000 to $50,000 are among the nation's 43 million uninsured. The percentage is even higher among those making less than that: 23%. Even those with household incomes exceeding $75,000 saw a rise in the percent uninsured in the last Census Bureau survey.
"It's to the point where something needs to be done," Clingerman says. "In America, we should have a better system than we do."
A survey released in February by the state of South Carolina found that 19% of its population was without health insurance for at least part of the year in 2002-2003. Sixty percent of the uninsured were employed. Of those uninsured whose employers offered coverage, 36% said they did not enroll because they could not afford it, reflecting the growing bite that health costs are taking out of workers' income.
The largest group of South Carolina's uninsured, 44%, earned less than $30,000, but 24% earned $30,000 to $40,000, says Viki Fox, project manager for the survey. Their average age was 33.
"The thing that surprised me the most is that data," Fox says. "Being uninsured is becoming more of a middle-class problem. It's not just a problem for people who are poor or not working."
Insurance Costs Rising
Many employers still pick up a large chunk of health insurance premiums, according to a national survey by the Kaiser Family Foundation. Even so, last year workers paid an average of $2,412 toward their premiums, an amount equal to 5.6% of the median household income.
The percentage of the premiums workers pay is expected to rise. Employers also are requiring workers to pay more for annual deductibles and such out-of-pocket costs as doctor visits and prescription drugs. Those out-of-pocket costs can quickly add up.
According to an economic model developed by the Center for Studying Health System Change, an estimated 5% of individuals would spend more than 10% of their income on out-of-pocket health costs under an insurance policy that requires them to pay a $500 annual deductible and 20% of the health costs after that. Such policies are common among those provided by employers. For those in poor health, 25% would spend more than 10% of income on that type of policy, says the center, a Washington think tank.
A new trend among employers is to require workers to pay more toward their health insurance, with some considering offering policies that come with a $1,000 annual deductible.
Such high-deductible policies also are supported by the Bush administration, which sees them as a way to help make consumers more judicious users of health care. Congress, too, gave a nod of approval in the Medicare bill, allowing consumers with certain high-deductible health insurance policies to open tax-free health savings accounts to be used for medical care.
Hardest hit in the health insurance cost struggle are those whose employers don't offer benefits. Getting coverage can be difficult - and premiums can rise several times a year.
"I used to pay $325 a month, and then, with my new son, $529, and now it's $531," says Narah Anderson of Miami. "My husband used to pay $157 and now will be paying $192. That's $723 a month for two healthy adults in their 30s and a baby. In some parts of this country, that's a mortgage payment. It's ridiculous."
With a household income of more than $50,000, Anderson says they can afford the payments. But, she says, a year ago when their business was not doing well, they considered what essentials they would keep if they had to drop some expenses. The mortgage payment, food and electricity made the list. Health insurance did not.
Harder for Those With Poor Health
Those in poor health have an even harder time.
"We're barely making it, and part of that is because we have to spend so much for health insurance," says Soleimani, 46, who suffers from a variety of health problems, including diabetes, glaucoma and asthma.
The monthly tab for her and her husband rose to $1,200 this year, up from $800 last year. That's a large chunk of the approximately $45,000 in combined income she and her husband earn each year. Soleimani owns the Work Place, an Arlington, Va., consulting firm that assists small businesses. Her husband is an audio-visual technician for a hotel chain. His employer offers insurance, but only for those who work 40 hours a week. During slow periods, he doesn't always get 40 hours a week, so the couple cannot go on his insurance.
Soleimani knows that because of her illnesses, if she drops coverage, she may not find another policy.
"I'm staying where I'm at. I have no choice," she says.
And for the poor, health troubles only compound their financial woes.
Lisa Davis, 36, works full time as a lab tech in a Tennessee factory, but her income and illnesses allow her and her three children to qualify for the state's Medicaid program. Her husband is a self-employed carpenter and does not qualify for the program. He has a painful hernia, but Davis says they can't afford the surgery he needs.
Davis has congestive heart failure and other ailments. Because they live in a rural area, the couple had to drive to Nashville for her treatment. To get to Nashville, they had to buy a newer car because their older one was not reliable.
"We had to purchase a vehicle, and we got behind on our car payments, yet we had to have the car," Davis says.
At one point, she was taking 20 different prescriptions. Now she's down to 10. But she worries because the state's Medicaid program is targeted for cuts, including a possible limit of six prescriptions per enrollee. She credits the program with saving her life.
"Had the same thing happened to my husband, I'm not sure he would be here because he doesn't have insurance," Davis says. "What happens to people who don't get help and think, 'Do I get my medicine this month, or do I eat or do I get my electricity turned off?' "
Sturma, who says he was laid off from his last job about a year ago, says his hope for regaining health coverage is to find a job with benefits somewhere near his small town of Corsicana, Texas, about 50 miles south of Dallas.
Long term, he says the answer is "a national health policy." In the short run, he's just hoping he doesn't get sick.
"I'm a very youthful 60, and so far there have been no problems," he says.
03-17-04 10:01 EST
Don Clingerman says his 62-year-old mother's retiree health coverage is so expensive - $7,900 a year - that he may recommend she drop it, gambling that she'll stay well until she's 65 and can get Medicare.
Hank Sturma, 60, says he's been without a job - and without insurance - for about a year. Sturma says he can't afford the $325 a month it would cost to add him to the policy his wife has through her job at a nursing home.
Rising health care costs are increasingly pressuring the middle class, adding a large and politically influential group to the category of those who fear they may soon have to do without.
There's little hope for relief in the short term. Health spending is expected to rise well above inflation for years to come. Employers are increasingly passing on the additional costs to their insured workers, causing some workers to opt out, saying they can't afford it. And, at some workplaces, employers are dropping coverage altogether.
For those who have to buy their own insurance - or those on the low end of the income scale - insurance has long been hard to afford.
"What this country is actually doing is gradually pricing the lower third of the wage and income distribution out of health care," says Uwe Reinhardt, a Princeton economist.
The success or failure of efforts to control health care costs in the next decade will determine whether those in higher income brackets are similarly shut out, he says.
Good Job, No Insurance
Harvard economist David Cutler estimates that if medical costs rise 5% above inflation for each of the next four years, at least 3 million more U.S. residents will be without coverage.
"We're setting ourselves up for a big implosion of the health care system," says Cutler, author of Your Money or Your Life: Strong Medicine for America's Health Care System.
Many of those will be workers with good jobs and decent pay.
"These newly uninsured Americans will be a different category of citizenry: solidly and continuously employed people who suddenly find themselves totally without a health care safety net because of soaring health care premium costs," say the authors of Epidemic of Care, George Halvorson, the CEO of Kaiser Permanente, and George Isham, medical director for insurer HealthPartners.
Today's average premium for a family insurance policy - $9,086 a year- already represents 21% of the national median household income of $42,409.
If insurance premiums continue to rise about 10% a year, today's average premium could double in just over seven years. Wages, however, are only expected to grow at about 3% a year.
Some analysts say the rising cost of premiums and increasing load of deductibles and other fees will lead more of the currently insured to drop their coverage.
"People will start playing roulette with their health insurance," says Glenn Melnick, professor of health care financing at the University of Southern California. "I can see a middle-class family saying, 'We need to cover Mom and Dad, but we'll let the kids go without and put that money into their college fund.' "
Clingerman, who lives in Reedsville, W.Va., says his family faces such a quandary. His 62-year-old mom is in good health and doesn't take any prescriptions. She is covered under a policy his now-deceased father had through a former employer. But the cost has rapidly risen to nearly $658 a month, which she pays out of her pension of about $800 a month. She will be eligible to enroll in Medicare in three years.
"My suggestion is she drop it," says Clingerman, whose own policy through his job costs him $20 a month. "It's a gamble, but that's what insurance is: a gamble."
Already, 19% of those whose household income is $25,000 to $50,000 are among the nation's 43 million uninsured. The percentage is even higher among those making less than that: 23%. Even those with household incomes exceeding $75,000 saw a rise in the percent uninsured in the last Census Bureau survey.
"It's to the point where something needs to be done," Clingerman says. "In America, we should have a better system than we do."
A survey released in February by the state of South Carolina found that 19% of its population was without health insurance for at least part of the year in 2002-2003. Sixty percent of the uninsured were employed. Of those uninsured whose employers offered coverage, 36% said they did not enroll because they could not afford it, reflecting the growing bite that health costs are taking out of workers' income.
The largest group of South Carolina's uninsured, 44%, earned less than $30,000, but 24% earned $30,000 to $40,000, says Viki Fox, project manager for the survey. Their average age was 33.
"The thing that surprised me the most is that data," Fox says. "Being uninsured is becoming more of a middle-class problem. It's not just a problem for people who are poor or not working."
Insurance Costs Rising
Many employers still pick up a large chunk of health insurance premiums, according to a national survey by the Kaiser Family Foundation. Even so, last year workers paid an average of $2,412 toward their premiums, an amount equal to 5.6% of the median household income.
The percentage of the premiums workers pay is expected to rise. Employers also are requiring workers to pay more for annual deductibles and such out-of-pocket costs as doctor visits and prescription drugs. Those out-of-pocket costs can quickly add up.
According to an economic model developed by the Center for Studying Health System Change, an estimated 5% of individuals would spend more than 10% of their income on out-of-pocket health costs under an insurance policy that requires them to pay a $500 annual deductible and 20% of the health costs after that. Such policies are common among those provided by employers. For those in poor health, 25% would spend more than 10% of income on that type of policy, says the center, a Washington think tank.
A new trend among employers is to require workers to pay more toward their health insurance, with some considering offering policies that come with a $1,000 annual deductible.
Such high-deductible policies also are supported by the Bush administration, which sees them as a way to help make consumers more judicious users of health care. Congress, too, gave a nod of approval in the Medicare bill, allowing consumers with certain high-deductible health insurance policies to open tax-free health savings accounts to be used for medical care.
Hardest hit in the health insurance cost struggle are those whose employers don't offer benefits. Getting coverage can be difficult - and premiums can rise several times a year.
"I used to pay $325 a month, and then, with my new son, $529, and now it's $531," says Narah Anderson of Miami. "My husband used to pay $157 and now will be paying $192. That's $723 a month for two healthy adults in their 30s and a baby. In some parts of this country, that's a mortgage payment. It's ridiculous."
With a household income of more than $50,000, Anderson says they can afford the payments. But, she says, a year ago when their business was not doing well, they considered what essentials they would keep if they had to drop some expenses. The mortgage payment, food and electricity made the list. Health insurance did not.
Harder for Those With Poor Health
Those in poor health have an even harder time.
"We're barely making it, and part of that is because we have to spend so much for health insurance," says Soleimani, 46, who suffers from a variety of health problems, including diabetes, glaucoma and asthma.
The monthly tab for her and her husband rose to $1,200 this year, up from $800 last year. That's a large chunk of the approximately $45,000 in combined income she and her husband earn each year. Soleimani owns the Work Place, an Arlington, Va., consulting firm that assists small businesses. Her husband is an audio-visual technician for a hotel chain. His employer offers insurance, but only for those who work 40 hours a week. During slow periods, he doesn't always get 40 hours a week, so the couple cannot go on his insurance.
Soleimani knows that because of her illnesses, if she drops coverage, she may not find another policy.
"I'm staying where I'm at. I have no choice," she says.
And for the poor, health troubles only compound their financial woes.
Lisa Davis, 36, works full time as a lab tech in a Tennessee factory, but her income and illnesses allow her and her three children to qualify for the state's Medicaid program. Her husband is a self-employed carpenter and does not qualify for the program. He has a painful hernia, but Davis says they can't afford the surgery he needs.
Davis has congestive heart failure and other ailments. Because they live in a rural area, the couple had to drive to Nashville for her treatment. To get to Nashville, they had to buy a newer car because their older one was not reliable.
"We had to purchase a vehicle, and we got behind on our car payments, yet we had to have the car," Davis says.
At one point, she was taking 20 different prescriptions. Now she's down to 10. But she worries because the state's Medicaid program is targeted for cuts, including a possible limit of six prescriptions per enrollee. She credits the program with saving her life.
"Had the same thing happened to my husband, I'm not sure he would be here because he doesn't have insurance," Davis says. "What happens to people who don't get help and think, 'Do I get my medicine this month, or do I eat or do I get my electricity turned off?' "
Sturma, who says he was laid off from his last job about a year ago, says his hope for regaining health coverage is to find a job with benefits somewhere near his small town of Corsicana, Texas, about 50 miles south of Dallas.
Long term, he says the answer is "a national health policy." In the short run, he's just hoping he doesn't get sick.
"I'm a very youthful 60, and so far there have been no problems," he says.
03-17-04 10:01 EST