Employer-provided insurance continues to decline - USATODAY.com

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Employer-provided insurance continues to decline Updated 4h 53m ago | Comments

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By Julie Appleby, USA TODAY The percentage of people with health insurance through their employers — traditionally the way most people get coverage — is continuing to shrink, raising anxiety among workers and invigorating a debate about whether insurance should be tied to jobs. Many of those who get their coverage through their jobs are becoming less secure that those benefits will always be there. Enlarge

By Jeff Adkins for USA TODAY

Lyle Kenaga's Nashville company, Business Cards Tomorrow, used to pay 100% of employees' premiums but now pays just 70% in an effort to reduce the impact of rising health costs.

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YOUR THOUGHTS: How would you make sure those who needed care could afford it? "It's going to disappear," says Angela Ruggiero of North Port, Fla., who lost her insurance when she and her husband changed jobs. "There's no way employers can continue to pay premiums if they continue increasing."

Her concern is reflected in the ongoing discussions among policymakers, politicians and some business leaders over whether to alter the link between employment and insurance. Several ideas have been floated, including a range of proposals in Congress. FIND MORE STORIES IN: Angela Ruggiero | Kaiser Family Foundation | Health Policy | Robert Laszewski The measures can be lumped into differing philosophies about the direction the USA should move: either toward a health insurance market in which people buy policies on their own while armed with tax credits or deductions, or one in which people are able to buy insurance through group-like "exchanges," with some government oversight. Some of the plans likely would encourage employers to drop coverage because the employers would lose all or part of their ability to write off insurance as a business expense.

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Federal legislation is unlikely this year. But the chatter about fundamental changes in health insurance comes as a declining percentage of employers are offering coverage. That's fueling concern among consumers such as Ruggiero who say the system isn't working and is poised to leave rising numbers of people — particularly those with health problems — struggling to get insurance:

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•The percentage of all employers offering health insurance in the past eight years peaked in 2000 at 69% and has fallen steadily since, hitting 60% this year, according to an annual survey of employers by the non-partisan Kaiser Family Foundation. Among small firms of three to nine workers, the percentage offering insurance has dropped even more — from 58% in 2001 to 45% this year.

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•From 2001 to 2005, the number of uninsured U.S. workers rose by 3.4 million. Almost 19 million workers — 17% of all employees — were uninsured in 2005, according to the Kaiser Commission on Medicaid and the Uninsured.

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"I don't think people realize" how easy it is to become uninsured, says Ruggiero, 41, who says she used to think "the only uninsured Americans were the homeless." Three years ago, she and her husband, John, left jobs with health benefits in New York to move to Florida to strike out on their own: John as a real estate agent and Angela as an office manager for an financial planner. Neither job came with health insurance.

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Then they learned how difficult it is to buy health insurance outside of employment, mainly because they both had some minor health conditions. They were hopeful about an "open enrollment" period allowed each year under Florida law. During that time, insurers must offer coverage to sole proprietors and may not exclude those with medical problems. But for the Ruggieros, the cost of coverage was out of the question: $1,500 a month to cover the couple and their 11-year-old son, Jared. So they remained uninsured until last January. When the real estate market tanked, John took a job as a package handler for a shipping firm, a position he still holds part time because it provides his family with health insurance. Eventually, John quit real estate sales and took another full-time job in a warehouse. The warehouse job offers health insurance, but his share of the monthly premiums would have been $300, or about 10% of his income, so he declined.

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Employer-provided insurance continues to decline - USATODAY.com

http://www.usatoday.com/money/industries/insurance/2007-11-12-so...

Insurance from his part-time job doesn't cost anything out of his paycheck. "It's a lot of juggling," says Angela Ruggiero. Paying more for coverage Like the Ruggieros, most people with insurance get coverage through their jobs. Among people with health insurance, the Census reports that 59.7% got it through their jobs in 2006, down from 60.2% in 2005. And they're paying more for it. The average amount workers pay toward the premium for a typical family policy rose from $129 a month in 1999 (about $160 in today's dollars) to $273 this year, a jump of 70% when adjusted for inflation, the Kaiser survey of employers shows. The increases come mainly because premiums have soared, rising at several times the rate of inflation in most years. In many cases, cost-cutting employers have increased the share of the premiums that workers pay. For years, Lyle Kenaga, president of Business Cards Tomorrow in Nashville, paid 100% of the premiums for his 15-employee firm. But two years of 20% rate increases from his insurer forced him to reduce the amount his company pays toward coverage. This year, the firm pays 70% of the premium cost; workers pick up the rest. If huge increases in premiums continue, "We'll have to consider whether or not to continue providing coverage," he says. Premiums continue to go up, although the rate of increase has slowed in the past couple of years. This year, the average increase faced by employers was 6.1%, according to the Kaiser survey, well below the recent peak increase of 13.9% in 2003. Such premium increases weigh heaviest on lower-income workers. For example, a household earning $40,000 this year would have to pay 8% of its pretax income to cover the average share paid by workers — $3,281 — for a typical family policy offered by employers, which this year cost $12,106. That doesn't include deductibles and co-payments that those with coverage must pay. "People should be nervous," says Len Nichols, an economist at the Washington think tank New America Foundation. "People aren't so afraid of losing their jobs as (of) not being able to afford health insurance even with a good job," he says. For many small employers, years of premium increases have given them few options: Raise the amount workers pay, drop coverage or reduce benefits. "When they hit us with another 25% increase for this year, we had to re-evaluate," says Howard Chanin, president and co-owner of 17-employee Butler Mortgage in Kissimmee, Fla. Chanin asked his workers whether they'd rather have higher deductibles or higher premiums. They wanted the lower premiums. So the annual deductible — the amount workers pay, in addition to premiums, for medical care before their insurance coverage begins — went from $500 a year to $2,500. "We're taking it year by year," Chanin says. Looking for answers Many large employers are uncomfortable with the growing cost of health insurance, but few want to get out of offering coverage entirely. "They see it as a way to compete for skilled workers, and they do sense that they have a compact with the employee not to walk away from it," says Robert Laszewski, president of Health Policy and Strategy Associates, a consulting firm that works with insurers and other health care clients. Many small employers also say they want to continue offering benefits. "I can't imagine not offering insurance," says Diane Dearing, owner of Display Structures in Troy, Mich. Because of rising costs, Dearing had to change insurers this year — and put more than half of her 20 employees into an HMO, which has a specific list of doctors and hospitals that it covers, rather than a more expensive preferred-provider organization with a wider choice of doctors. Her workers pay 25% of the premium. "It's a huge expense," Dearing says. "But even if I had to go to something like a high-deductible major medical plan, if we're in business and making anything at all, we will still provide insurance." The idea of separating insurance from employment has been raised before. "Even in the height of a strong economy, people were talking about it," says Paul Fronstin of the Employee Benefit Research Institute, which published a book in 1999 called Severing the Link Between Health Insurance and Employment. "Now it's taking on a new life." Among other things, critics of the current system say it grants tax breaks to corporations that offer coverage, and tax-free benefits to the workers who get coverage. At the same time, low-wage workers who don't get insurance through their jobs not only don't have coverage, but also don't get the tax break. "The employer-based system is fundamentally unjust," says Guy Clifton, a professor of neurosurgery at the University of Texas Health Science Center in Houston who is in Washington as a Robert Wood Johnson health policy fellow. Proposals to modify the health insurance system — or sever it from employment — are gaining currency across the political spectrum, from presidential candidates to Congress to business groups. Some of the proposals now under debate would encourage people — armed with tax credits or deductions — to buy their own insurance on the private market, but would not require anyone to buy it or insurers to sell to all who apply. Other proposals would require all individuals to have coverage and would create "exchanges" in which groups of residents and employees could buy health insurance, regardless of where or if they work. Insurers would be required to sell policies

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Employer-provided insurance continues to decline - USATODAY.com

http://www.usatoday.com/money/industries/insurance/2007-11-12-so...

even to applicants with health problems. In Congress, a bipartisan bill — unusual for a health-reform effort — has been proposed by Sens. Ron Wyden, D-Ore., and Bob Bennett, R-Utah. It would have employers drop coverage and give workers raises, then create exchanges that would allow everyone to buy insurance. Even the president of the Service Employees International Union, Andrew Stern, has said that employer-based coverage is dead and an alternative should be found. "It's a terrible idea to rely on the individual market as it's presently constituted," says Jacob Hacker, professor of political science at Yale, mainly because those with medical conditions find it difficult to get coverage and insurers fear that people wait until they know they need health care to buy it. Sara Horowitz, founder and director of the Freelancers Union — whose members are independent workers in finance, non-profits, domestic services, publishing, advertising and health care — says something needs to change, because the working world has. "The nature of work is changing: Jobs are much more short-term and flexible," Horowitz says. "That's why we need to think about new kinds of models … and start building a portable benefits network." Change is not likely soon, however. Efforts to revamp health insurance have begun in a few states — including Massachusetts, Vermont and Maine — but no big changes will occur nationally until well after the November 2008 election. And although it's eroding, employer coverage isn't going to end suddenly. "Employer coverage won't go away overnight, unless there's a major change to federal legislation that oversees health insurance," says the employee benefit institute's Fronstin. "Employers don't have to offer it, but they see a business case for offering it, and they don't (currently ) see a viable alternative." TELL US: How would you make sure those who needed care could afford it? Share this story: Digg

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Posted 13h 20m ago Updated 4h 53m ago

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jch wrote: 2m ago

Make all insurance companies Non-Profit. The profits of these insurance companies are the problem. Who ever said insurance has to be a profitable business? Recommend

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iowareal wrote: 4m ago

"Sicko" showed exactly what Michael Moore wanted it to show. In any case, I'm not saying the Europeans don't receive adequate health care. In fact, I'm sure "adequate" is exactly the perfect ajective for it. Thing is, Americans are used to something more. They don't want "enough"; they expect more than enough. Any program that limits access is a non-starter in this country. Recommend

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CSD wrote: 6m ago

U.S. ranks only 37th in the world in quality health care Nationally America spends 82% more per person on health care than other countries. Most industrialized nations have national health care. Our health care system is broken it does not work on the free market as most goods and services do. You don't see doctor's advertising their prices to create competition. We need universal health care now!

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Employer-provided insurance continues to decline - USATODAY.com

http://www.usatoday.com/money/industries/insurance/2007-11-12-so...

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Rosie the Beagle wrote: 7m ago

First, you ask the wrong question - How would you make sure those who needed care could afford it? All of us need care, if not today, than someday, often without warning. So, perhaps the question should be: How can Americans guarantee access to affordable, basic care? The answer to that is simple, if you can define "affordable, basic care". ROSIE THE BEAGLE DOG's SOLUTION: Marry Massachusettes' individual mandate, Tennessee Governor Bredesen's CoverTN basic coverage (a mini-med) with Senators Kerry/Reed (and Frist in the past) federal reinsurance proposal. Pilot in Tennessee in 2008. The mini-med minimum coverage would be consistent with federal limits on high deductible health plans that qualify for a Health Savings Account - with a maximum covered expense of $25,000. Federal reinsurance kicks in at that point, but coverage there is limited to Medicare-eligible charges. The result would be employer wholesale adoption of coverage because it would be affordable, and for the reinsurance premium, they limit their liability. Individuals who do not have access to employer sponsored coverage would pay premiums into the state system on an income-based, sliding scale basis. Background Considerations: Affordable: (1) Size of the Issue: Few understand the true cost of medical coverage/services. Fact is, most experts agree that Americans pay about 16% of gross domestic product (GDP) towards the cost of medical services. GDP /> Personal Income. We know few Americans are willing to pay 16% of their income towards medical services - look at article's example where a person refused to spend 10% of his income to cover three people. Most Americans want the best health care coverage YOUR taxes will buy. Former Senator Long described this as '... Don't tax you and don't tax me, tax that guy behind the tree ... or ,,, the best tax is the one I owe and you pay.' So, until we become willing as individuals to do what we collectively do as a society, the debate will continue. (2) Age best predictor of cost. In 2008, the average annual cost of Medicare plus a medicare supplement will exceed $13,000 per person! And, that doesn't even include the cost shift from limits on provider reimbursements that are paid by people who are not eligible for Medicare. So, averages, including those cited in the article, can be deceiving. (3) Most working Americans pay more to fund current retirees Medicare Part A Hospitalization coverage than they pay for their own medical coverage through their employer. (4) Families USA and other studies show that most Americans who lack health insurance, like those cited in your article, either have access to coverage through their employer or earn enough to afford coverage. In fact, for most people, the decision about health insurance is a knowing choice, a prioritization challenge. After the Health Insurance Portability and Accountability Act of 1996, there really isn't the level of 'job lock" that people once experienced. Basic Care: Over the last few years, the Centers for Medicare and Medicaid Services conducted a number of large focus group discussions with Americans. My understanding is that thousands of Americans participated in these sessions. One important question asked was what services to include in a basic health plan. The overwhelming answer was, EVERYTHING - leave nothing out, and have someone else pay for it. Trying to meet unsatiable demands is a recipe for disaster - so, the Medicare covered expense concept is only a first step at trying to reign in the demand. Recommend

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terrible wrote: 8m ago

You can have different health programs without calling it socialism...people who cry socialism just like their for profit hospitals in this coutry and probably are in on the , ole hand trick in the government grab bag of money scheme. Give me a break, the system as is now is going to cave in and its going to be different, in this country...of course with the lobbiest help and assistance. Recommend

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OneTrack wrote: 8m ago

We spend more than twice the amount on health care than any other country in the world...strangely enough we ranked 35 in overall quality. We need national coverage for all American citizens and Legal residents. I do not believe tax payers owe illegal immigrants, food stamps, free health care, Education, ESL tutors or any social service. If I break our laws I am punished and they should meet with the same consequences, rather than being rewarded at our expense. Recommend

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flyover country wrote: 8m ago

Regulate--not replace. Health insurance needs to remain private. The thought of these clowns in D.C. running health insurance scares the h#ll out of me! We already have billions in fraud in Washington with other programs. Recommend

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terrible wrote: 11m ago

Don't give me that stuff other countries spend less on health care because they deny coverage of all their ailments or whatever. I know better than that. A country that pays to have someone rub your back and its still a lower cost than here in U.S. , you gotta conclude we are saps or suckers. Recommend

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michael s wrote: 12m ago

OneTrack wrote: 2m ago Neo Con - Here is a better plan...Eliminate the middle man (Insurance companies). Force Hospitals, Doctors, Pharmacies etc. To clearly post their prices forcing them to compete and mandate electronic records to eliminate the administrative waste in the system. ---------------------------------

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11/13/07 12:59 PM

Employer-provided insurance continues to decline - USATODAY.com

http://www.usatoday.com/money/industries/insurance/2007-11-12-so...

That sounds good. Removing ins companies will save money for awhile - until that amount is eaten up. Providers can post pricing but will you get in or when. The doc's offices may not take new patients as done now. Electronic record systems are NOT cheap and do NOT run by themselves. Many providers simply cannot afford them due to resources - cost of software/hardware, IT staff, maint costs, etc. Recommend

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Neo Con wrote: 13m ago

One Track: What you offered isn't a full plan. An electronic records system is already being developed. But I'm not in favor of legislating insurance companies out of business. In my plan, the role of competition and free market principles still apply to a wide degree. Recommend

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