Health insurance costs squeeze families, businesses

Premiums climb faster than wages in state, study says

By Joyzelle Davis, Rocky Mountain News (Contact)

Published October 8, 2008 at 12:05 a.m.

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Family health insurance premiums soared nearly five times faster than wages for Colorado workers from 2000 to 2007, according to a study released Tuesday.

Annual job-based health insurance premiums - including worker and employer share - jumped nearly 75 percent to $11,878 during that eight-year period, while the median income of Colorado's workers grew 16 percent to $30,476, Families USA said in report. That's slightly better than the national average increase of 78 percent in premiums with a 15 percent increase in wages.

The worker's portion of annual premiums for family health coverage increased 97 percent to $3,029 in 2007, while employees paying only for individual coverage saw their annual premiums rise 86 percent to $760.

"Skyrocketing health care costs were a problem before the current economic downturn, and slow wage growth or job losses now only make matters worse," said Ron Pollack, executive director of Washington-based Families USA, which advocates universal health coverage. "A bad situation is clearly growing worse."

The report comes as the issue of affordable health care is one of the top concerns among voters in the presidential race and in statehouses around the country, including Colorado. An estimated 800,000 Colorado residents and 47 million Americans lack health insurance at any given time.

Pollack pointed out that the higher premiums come even as the health insurance itself grows thinner, often requiring higher deductibles, co-payments and co-insurance.

Employers, who often pay for the majority of health insurance, have been squeezed by rising insurance costs as well. For health coverage for families in Colorado, the employer's portion of annual premiums increased 68 percent to $8,849. For coverage of individual employees, employers are paying 72 percent more for a total of $3,509.

"This is a growing crisis that not only affects the 799,000 uninsured people in Colorado, but every individual, family and business in the state," said Dede de Percin, executive director of the nonprofit Colorado Consumer Health Initiative. "There are grave economic consequences when everyone - businesses and consumers - are badly squeezed by relentlessly increasing premiums."

By the numbers

75 percent: Increase in family health insurance coverage premiums from 2000 to 2007, from $6,797 to $11,878

16 percent: Increase in median earnings of Colorado workers during the same period from $26,390 to $30,476

$8,849: Average amount in annual premiums for family insurance the employer paid in 2007, an increase of $3,588

$3,029: Worker's portion of annual family premiums, up $1,493

• October 8, 2008

  2:53 p.m.

  Suggest removal

  BrianSchwartz writes:

  Why are health costs rising? Because patients are spending other people's money. As Devon Herrick writes for the National Center for Policy Analysis:
  "A primary reason why health care costs are soaring is that most of the time when people enter the medical marketplace, they are spending someone else's money. When patients pay their own medical bills, they are conservative consumers. Economic studies and common sense confirm that people are less likely to be prudent, careful shoppers if someone else is picking up the tab. Thus, the increase in spending has occurred because third parties - employers, insurance companies or government - pay almost all the bills."
  For details on this, see:
  http://cdhc.ncpa.org/commentaries/why...

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