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Health insurance costs rise faster than wages { September 28 2004 } Original Source Link: (May no longer be active)
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Story last updated at 7:20 a.m. Tuesday, September 28, 2004
Health insurance costs rise faster than wages
Report finds premiums in S.C. increased 4.6 times faster than wages in last four years
BY JONATHAN MAZE
Of The Post and Courier Staff
The average cost for health insurance premiums in South Carolina rose 4.6 times faster than wages over the last four years, according to a report to be released today by the S.C. Appleseed Legal Justice Center and Families USA.
Between 2000 and 2004, the average salary for a South Carolina worker rose from $28,420 to $31,810, an 11.9 percent increase, according to the study. During the same years, that worker's annual contribution for a family insurance policy rose from $776 to $1,199, a premium increase of 54.5 percent.
Nationally, premiums rose 35.9 percent in the years studied, while wages climbed 12.4 percent, the study found.
While everyone is paying more for insurance, the problem is especially pronounced for some 226,000 state residents whose health care costs now eat up more than a quarter of their annual income. That's a 41 percent increase since 2000, according to the study.
"Health care is going to become unaffordable for most South Carolinians, especially for low- or moderate-wage workers, unless we in South Carolina do more to help lessen the burden," said Sue Berkowitz, director of S.C. Appleseed.
Families USA is a Washington D.C.-based health care consumer advocacy group. It is releasing the study in this state in conjunction with S.C. Appleseed, a Columbia-based advocate for the poor.
Medical inflation has been rising much faster than inflation as a whole for some time. As a result, health insurance companies are charging dramatically higher premiums, including increases of 13.9 percent last year and 11.2 percent this year, according to the Kaiser Family Foundation.
These increases are pricing small businesses out of the market. Some workers have gone so far as to opt out of increasingly costly employer-sponsored insurance plans.
Some 1.16 million South Carolinians were uninsured at some point in 2003-04, an increase of 240,000 from 1999-00, according to the Families USA study. Earlier this year, a state Department of Insurance study found that nearly one in five state residents is uninsured at some point during the year.
Kevin Campbell, a bankruptcy attorney in Mount Pleasant, said he has seen a growing number of people forgo health insurance so they can pay their credit cards.
"They pay credit cards over health insurance because the credit card company is screaming the loudest," he said. "Health care is often the first to go."
The insurance affordability problem has been worsening for most of this decade. It's been fed in part by the higher number of uninsured patients, which in turn forces hospitals to charge insurance companies higher prices. Those insurers make up for the higher costs by raising premiums.
Some employers pay a greater share of premiums, so not all Americans have faced these increases in insurance on their own. But experts agree it's getting tougher every year for employees and their employers to keep up with health care inflation.
"Well, duh," said Lynn Bailey, a health care economist in Columbia.
State workers, for example, have seen huge increases in health insurance premiums year after year.
Their salaries, meanwhile, have stayed stagnant for three years because of state budget problems. They finally received a 3-percent hike in July.
"You're taking one step forward and three steps back," Bailey said.
Exacerbating matters, health insurance nowadays comes with higher deductibles and co-payments that put more of the burden on workers' shoulders.
Average in-network annual deductibles in preferred provider organization plans, the most common type of health insurance plan, have gone from $175 to $287 between 2000 and 2004, according to Kaiser. Out-of-network PPO deductibles now average $558.
"This is becoming more and more of a problem for all of us," Berkowitz said.
The growing burden on employees is especially troublesome for low-income workers with chronic health problems.
Earlier this month, a study by the Center for Studying Health System Change in Washington, D.C., found that 42 percent of low-income workers with serious ailments spent more than 5 percent of their income on health care last year. In 2001, just 28 percent of those workers spent that much or more.
Some of those people pay their bills through their tax refunds.
South Carolina's public hospitals, including the Medical University of South Carolina, can garnishee the tax refunds of state residents with outstanding hospital bills. According to the state Department of Revenue, hospitals collected $6.14 million through this process in 2002, a 7.9 percent increase from 2000.
Berkowitz said that this debt is hurting those who are already hurting.
"You don't have that kind of debt unless you have a catastrophic illness in your family," she said. "And you have people who already have suppressed wages. Then they're faced with huge medical costs.
"This is already a difficult problem that's going to reach crisis proportions."
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