June 30, 2008
Rising employer premiums threaten employee health coverage in state, AARP finds
Seattle Times health reporter
Eroding health coverage
A NEW AARP SURVEY of 407 employers in Washington found ominous signs that workers may have to contribute more to keep their health-insurance coverage. Among the findings:
Cost sharing: Nearly half of the companies said they now pay 100 percent of the insurance premiums. An additional 26 percent pick up at least three-quarters of the costs, and 12 percent cover at least 51 percent of the premiums.
Coping plan: If current cost trends continue, 29 percent of the employers said, it's extremely or very likely they will raise workers' share of premiums in the next three years. Twenty-five percent said they will increase deductibles.
Terminating coverage: If health-care costs were to rise 10 percent above current levels, 14 percent of firms said they would drop health coverage. If costs rose 15 percent higher, 27 percent would do so. If costs rose 25 percent, four in 10 employers said they would stop providing coverage.
Source: AARP Survey of Washington Businesses about the Future of Employee Health Care Benefits
$2.90 an hour.
That's how much Scottie Marable spends on health coverage for each employee in her small Bellevue firm. The insurance was "free" to workers until three years ago, when Marable asked them to chip in 30 percent of the premiums.
Marable's five employees also pay for their heath insurance in hidden ways: through the raises she can't afford to give them or through benefits, such as vision coverage, she wishes she could provide.
Across Washington, employers' rising health-care costs are threatening thousands of workers with an even steeper toll -- the loss of any employer health coverage.
More than a quarter of Washington businesses say they will drop their health-insurance policies if costs go up 15 percent more, according to an AARP survey being released today. If last year's national average 6.1 percent increase in employer premiums holds, that day will arrive in little more than two years.
The telephone survey of 407 Washington companies of all sizes uncovered deep worries and dilemma among employers staggering under escalating premiums.
Average costs for insuring single employees have risen 32 percent -- an average $114 a month -- since 2005. Companies with fewer than 10 workers have taken the biggest hit, with costs nearly doubling to an average $687 a month per employee.
Two-thirds of the employers surveyed said that if trends continue, they plan to pass along higher costs by upping employees' share of premiums, deductibles or co-payments -- or all three -- in the next three years.
"Employers are trying to do the right thing, but there is a limit," said Doug Shadel, Washington director for AARP, an advocacy group for Americans 50 and older.
The survey, conducted between March 20 and April 1, had a margin of error of plus or minus 4.9 percentage points.
Forty-three percent of AARP's 40 million members nationwide work at least part time. Many members also rely on retiree health coverage, which is eroding fast.
Finding ways to expand coverage for more Americans while reining in costs should be a concern for everyone, Shadel said.
"Enough is enough," he said. "This is unsustainable."
Marable, co-owner of Pinnacle Marketing, which represents makes of cabinets, faucets and other home-improvement products, said that even though her Regence BlueShield premiums jumped 27 percent last year, she won't consider canceling her company's coverage.
She regards providing insurance both as a corporate responsibility and as an indispensable recruiting tool.
Still, she believes American workers are oblivious to the true cost of health care "because they're not paying the bill." She said one solution may be for employers to subsidize workers so that they can purchase coverage for themselves.
But piecemeal solutions won't work, argued Kerry Barnett, executive vice president of Regence.
In a separate interview before the survey was released, Barnett said he believes any change must be comprehensive to work. It would require Americans to wean themselves from expensive medical technologies and take more responsibility for their health, he said.
The health-care system also would have to be restructured, including the basis on which doctors and other providers are paid.
Finally, Barnett said, millions of uninsured people must be coaxed or helped to get coverage.
Kyung Song: 206-464-2423 or firstname.lastname@example.org
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