Rising health insurance costs outpace income: report

Wisconsin workers who have trimmed family budgets to pay health insurance premiums already know the costs have risen, but they may be shocked to learn by how much. A new report says Wisconsin workers’ premiums for family plans have risen nearly five times faster than their pay since 2000. “Insurance premiums in the period between 2000 and 2007 rose by 73.9 percent. In percentage terms, (Wisconsin) earnings increased by 15.5 percent,” said Ron Pollack, executive director of Families USA, a consumer health care advocacy group. The Wisconsin median worker’s earnings grew from $24,421 to $28,202 between 2000 and 2007, Pollack said. Pollack announced the report in a telephone conference call with Robert Kraig, program manager for Citizen Action of Wisconsin and U.S. Reps. Tammy Baldwin, D-Madison, and Steve Kagen, D-Appleton. In addition to higher premiums, consumers face higher out-of-pocket costs for “thinner” insurance plans that provide less coverage than in the past, Pollack said. The Families USA report found average family plan premiums in Wisconsin increased from $7,112 to $12,369 between 2000 and 2007. The figure represents the combined tab for the worker and employer share of premiums. A worker’s share of the cost rose from $1,458 to $2,573 a year while the employer’s portion climbed from $5,654 to $9,796. The premium costs on an individual health plan rose by $324 to $940 during the same period for a worker and by $1,349 to $3,559 for an employer. Families USA plans to issue reports for all 50 states by Oct. 22 to highlight the trend of higher premiums across the country. Wisconsin was the fourth report to be released. Pollack said the premium costs-to-income ratio ranged from 2.5 times to 17.1 times among states. Pollack said the increased premiums reflect higher costs for such items as medical technology, hospital care, physician services and pharmaceutical drugs. Robert Zirkelbach, spokesman for America’s Health Insurance Plans, said his members “recognize that rising health care costs are a burden on individuals and working families and are making it difficult for small businesses to be able to afford health care insurance for their employees.” Zirkelbach said the trade association has issued a proposal to address “the underlying cost drivers that are contributing to higher health care costs.” Glenn Mandel and wife, Diane Redelin, Egg Harbor small business owners, pay just under $14,000 a year for insurance premiums and out-of-pocket costs |because they say Redelin was misdiagnosed with a chronic gastrointestinal condition. Her premiums are higher because she is considered to have a pre-existing condition. “It’s too painful to look at,” Redelin said of the insurance bill. Mandel and their teenage children are insured by a different insurance company and have a $10,000 deductible to cut costs. Even with that, they can’t afford to provide insurance for their one employee because insurance would rise even higher. Lani Madis, a small family business owner from Eau Claire who participated in the conference call, said steadily rising premiums forced her and her husband to drop group health insurance for their two adult children who work for them. Madis “bit the bullet” and continued coverage in 2006 when premiums rose 26 percent. But the business could not cope with an estimated 40 percent premium increase for 2009. “Given the cost of gas, the predicted energy costs for the winter and our vendors raising their costs, we had to make a decision to drop group health insurance,” she said. Baldwin, said employers “are looking at incredibly difficult choices while our economy is in stress.” Kagen, an allergist before he was elected to Congress, said the report “shows we have to change the model we use to pay for health care.” In particular, Kagen said there’s a need for greater transparency on health care costs and the elimination of pre-existing medical conditions to deny or limit coverage to people.