Wednesday, December 12, 2012

Fwd: qotd: Rising costs and eroding protection

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-------- Original Message --------
Subject: qotd: Rising costs and eroding protection
Date: Wed, 12 Dec 2012 12:57:46 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

The Commonwealth Fund
December 2012
State Trends in Premiums and Deductibles, 2003–2011: Eroding Protection
and Rising Costs Underscore Need for Action
By Cathy Schoen, Jacob Lippa, Sara Collins, and David Radley

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

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

With the recent recession, millions of workers lost their jobs or were
otherwise unable to afford coverage and, as a result, joined the ranks
of the uninsured. From 2008 to 2010, the percentage of people with
employment-based insurance fell from 58.9 percent to 55.3 percent. An
estimated 9 million adults ages 19 to 64 lost a job with health benefits
and became uninsured during this period.

Along with rising numbers of uninsured, the nation has seen a rapid
increase in the number of underinsured, those at risk of high
out-of-pocket costs for medical care although insured all year. As of
2010, estimates indicate 81 million adults under age 65 (44% of all
adults) were either uninsured during the year or underinsured, up from
61 million in 2003.

From 2003 to 2010, median family incomes increased by only 10 percent,
on average, not enough to keep up with an inflation rate that has
increased by 18.5 percent over these seven years.
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.
The national debate on health care costs often centers on the federal
deficit and on Medicare's future. Less attention is focused on the costs
of private insurance spending per person, which have been rising faster
than Medicare spending per person and are projected to continue to do so
over the next decade. The mounting stresses on businesses and families
underscore the need for action on behalf of the private sector as well.
Absent a significant change in the way private insurance and health care
markets function, cost pressures will continue to push up private
insurance costs and out-of-pocket medical expenses, if the past two
decades are any guide.
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.

For full report, click "Issue Brief" at this link:

Comment: 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 ( <>) 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.

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