Trends in Premiums and Deductibles, Eroding Protection and Rising Costs Underscore Need for Action

[eridani]

For full report, click "Issue Brief" at this link:
http://www.commonwealthfund.org/Publications/Issue-Briefs/2012/Dec/State-Trends-in-Premiums-and-Deductibles.aspx?omnicid=20

Across states, the total average premium reached $15,022 per year in 2011 for family coverage, an increase of 62 percent since 2003.

Although premiums are rising more slowly than they were before enactment of the recent reforms, private insurance spending per person is projected to continue to grow more rapidly than incomes over the next decade.

By 2011, there were 35 states in which the annual premium equaled 20 percent or more of income, compared with just one state in 2003. And there are now no states where premiums amount to less than 14 percent of median incomes, compared with 13 such states in 2003.

Although workers are paying more for insurance, their premiums are buying them less financial protection because of the rapid increase in deductibles from 2003 to 2011. The resulting shift of medical care costs onto workers and their families has led to higher out- of-pocket costs for medical bills--on top of higher premium costs. By 2011, 78 percent of workers faced a deductible, compared with about half (52 percent) in 2003.

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To date, with highly concentrated insurance markets, the path of least resistance for insurers has been to simply pass on the rising costs of medical care and higher prices, while adding insurance administrative costs and profit margins. In fact, the major national private insurance companies have done well throughout the recession years, with strong pretax profit margins and administrative costs that have largely kept pace with increases in medical care costs.

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The Affordable Care Act's effectiveness in tackling costs, however, will require collaboration among public and private stakeholders to ensure that markets operate in the broad national interest of better health, more positive health care experiences, and lower future costs.

Comment by Don McCanne of PNHP: It just gets worse. Family insurance premiums are now over $15,000 - more than 20 percent of income in a majority of states. Family deductibles now average over $2000. Family incomes have not kept up with inflation, much less with the cost of health care. Yet private insurers are thriving.

Many are hoping that the Affordable Care Act will provide some relief. The PNHP website (http://www.pnhp.org) has a plethora of reports and studies indicating that there is no hope that that we will have truly substantial reform under this Act - only administratively-complex tweaks.

The authors of this report state that the Affordable Care Act's effectiveness "will require collaboration among public and private stakeholders." This is the fundamental reason that there is no hope. Under our current dysfunctional financing system, which was left in place by this legislation, that collaboration must be voluntary - an impossibility since each vested interest is jockeying for the most advantageous position.

Under a properly designed single payer system, the publicly-administered policies are designed to ensure collaboration of all parties. What works in the interests of the patients also works in the interests of the
collaborators. Until the nation is ready to demand structural reform that benefits us all, we are going to continue to see the numbers in this report grow even worse.