Decline in premium increases is still an intolerable increase
Health Benefits In 2007: Premium Increases Fall To An Eight-Year Low, While Offer Rates And Enrollment Remain Stable
By Gary Claxton, Jon Gabel, Bianca DiJulio, Jeremy Pickreign, Heidi Whitmore, Benjamin Finder, Paul Jacobs and Samantha Hawkins
Health Affairs
September/October 2007
Premiums for (employer-sponsored) family coverage increased an average of 6.1 percent from spring 2006 to spring 2007. This was the lowest annual increase in premiums since 1999 (when premiums rose 5.3 percent) and the fourth consecutive year in which premium increases declined from the previous year’s increase. Nonetheless, the average premium increase is 3.5 percentage points more than the increase in overall inflation as measured by the Consumer Price Index and 2.4 percentage points greater than the rise in workers’ earnings. Since 2001, premiums have increased 78 percent, while inflation rose 17 percent and workers’ wages, 19 percent.
The average annual cost for single and family coverage in 2007 is $4,479 and $12,106, including both employer and employee contributions.
http://content.healthaffairs.org/cgi/content/full/26/5/1407
Comment:
By Don McCanne, MD
Many of the media reports celebrate the fact that premium increases for this year have declined to only 6.1 percent. Stop right there!
This year’s premium will be used as the basis for next year’s increase. This year it is 3.5 percentage points more than the rate of inflation. That greater-than-inflation increase will never be recovered, and will be added to next year’s increase, and to the increase in every year thereafter. Not only this year’s increase, but the greater-than-inflation increases of each prior year and of each future year are also added. In the past six years alone, the greater-than-inflation increase has been 61 percent.
Some would say that the increase in workers’ wages is a more appropriate comparison than the rate of inflation. For the past six years, the greater-than-wage percentage increase in premiums has been only 59 percent. Only?
Some advocate lowering premiums by switching to less expensive, HSA-qualified high-deductible health plans (not less expensive health care). But, according to this report, “about two-thirds of employers offering HSA-qualified HDHPs do not make contributions to HSAs established by their workers with single coverage.” So the answer is to shift even more of the costs to the worker?
How much longer do we allow our health spending to compound at these rates? Isn’t this like… maybe… an emergency?