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Health costs rising faster than incomes, study says

Posted - Sep. 28, 2004 at 6:40 a.m.



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WASHINGTON -- Health insurance premiums paid by U.S. workers have risen nearly three times faster than average earnings since 2000, eroding the income of average Americans, a study based on federal data shows.

Premium costs for private health insurance coverage are projected to have grown 35.9% from 2000 through the end of 2004. Average individual earnings grew 12.4%, the study found.

The findings are from an analysis conducted by the Lewin Group, a private health economics consulting firm, for Families USA, a consumer-oriented health advocacy group that has supported Democratic presidential candidate John Kerry's health care proposals.

The findings are similar to those of other non-partisan groups, such as the Kaiser Family Foundation, and government agencies, including the Commerce Department.

The study, which is being released today, found that as health premiums consume a growing share of earnings, more Americans are spending a major portion of their annual incomes on health care. During the period studied, the number of Americans whose health care costs exceed one-fourth of their earnings rose to 14.3 million from 11.6 million, the study concludes.

Lewin used its computer economic models of the U.S. health care system to analyze data from the Census Bureau, the Labor Department and federal health care agencies.

The study was conducted in an attempt to pose and answer a version of President Reagan's memorable 1980 campaign question: Are you better off now than four years ago? The findings are certain to be used by Democrats to argue that average Americans have fallen behind economically under President Bush's administration and that any benefits Bush's tax cuts delivered to working families have been lost.

''These grim findings explain why health care costs and coverage have become a top-priority concern for America's families over the past four years,'' the Families USA report says.

But Bill Pierce, spokesman for Health and Human Services Secretary Tommy Thompson, challenged the credibility of Families USA and defended the administration's record on health care.

Pierce said the group is ''not objective'' because of ties to the Kerry campaign. Pierce said Bush ''led the most significant change in health care in this country'' with enactment of a Medicare prescription benefit last December.

Key points made by the study:

* In 26 states, workers' premium costs rose by more than 40%. The average premium amount paid by workers for family coverage rose from $1,433 to $1,947.

* The share of health premiums paid by employers rose 31.8%. The share of employer-paid premiums for family coverage went from $5,595 to $7,373.

The findings document a trend of rising costs and shrinking benefits. In an attempt to control premiums, some companies have increased co-payments, scaled back benefits and are imposing surcharges on workers who sign up for family benefits when their spouses are eligible for health coverage through another employer.

Those increased premiums and co-payments have contributed to a rising number of Americans confronting what economists call catastrophic health care costs.

Of the 14.3 million Americans younger than 65 whose health care costs are estimated at more than one-quarter of their earnings in 2004, the study found, a majority of those had health insurance coverage.

The number of insured Americans facing health care costs in excess of 25% of their earnings rose from 8.4 million to 10.7 million from 2000 to 2004, according to the report .

The report said overall increases in health care costs, including payments to hospitals and doctors and the cost of prescription drugs, are the main forces driving the rise in private insurance premiums. But it said the rising number of Americans without health insurance is a contributing factor, because costs of treating the uninsured who are not covered by government programs are passed along to others.

To see more of USAToday.com, or to subscribe, go to http://www.usatoday.com

© Copyright 2004 USA TODAY, a division of Gannett Co. Inc.

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