The underwriting cycle is not to blame
The Kaiser Family Foundation and Health Research and Educational Trust
Employer Health Benefits
2002 Summary of Findings
Between spring of 2001 and spring of 2002, monthly premiums for
employer-sponsored health insurance rose 12.7%, the second consecutive year
of double-digit premium increases, and the largest increase since 1990.
Average annual premium costs rose to $3,060 for single coverage (up from
$2,650 in 2001) and $7,954 for family coverage (up from $7,053 in 2001).
Premiums increased substantially faster than overall inflation (1.6%) and
wage gains for non-supervisory workers (3.4%).
This high rate of growth appears to have been driven primarily by rapid
inflation in spending for health care services. Premium equivalents for
self-insured plans (the estimated cost of health care claims for an employee
whose employer self-insures) - which are a reflection of growth in
underlying health care costs - grew by 12.3% over the last year, or roughly
the same rate as premiums for insured plans. This suggests that insurers'
decisions about premiums are being influenced more by cost trends than by
catch-up pricing associated with the underwriting cycle.
What seems clear is that employees are likely to pay more for health
benefits and health care in the future. This year, 43% of all firms and 78%
of large firms (200 or more workers) report that they are very or somewhat
likely to increase the amount that employees pay in 2003. Thirty-two percent
of all firms and 42% of large firms report that they are very or somewhat
likely to increase deductibles, while 34% of all firms say they are very or
somewhat likely to raise employee costs for prescription drugs.
With a weakened economy and escalating premium inflation, the brief period
of increasing employer coverage - and concomitant drop in the number of
uninsured Americans - has come to a close.
http://www.kff.org/content/2002/20020905a/3252a.pdf
Comment: The opponents of reform will not be able to pass this off as a
transient insurance underwriting blip. The increases in medical claims
expenses are real. Employers are no longer tolerating them. The resultant
increases in cost sharing by the employee-beneficiaries are making access to
health care truly unaffordable for an ever enlarging sector of our
population. Current policies will only increase rationing by ability to pay.
Yet most Americans believe that everyone should have access to essential
health care. The status quo is not acceptable.
Comprehensive private solutions do not exist. Employment linkage has
provided only a partial solution, and that is proving to be less and less
satisfactory as the numbers above indicate. Individually purchased health
plans have even greater deficiencies than the employment linked plans.
Individually designated accounts such as MSAs will not work for those with
significant health care needs. Charity will never be adequate simply because
health care costs greatly exceed the tolerated threshold of voluntary
contributions. We have depended on combinations of these private solutions,
and they have proven to be grossly inadequate.
If Americans really do want everyone to have access to a reasonable level of
care, then we must cooperate in deciding on which public solutions we should
adopt. Now, more than ever, there is a need to understand the impact of
various public policies in health care. The science is already there. Now is
the time to use it.