More information detailing the rising cost of healthcare with less coverage provided. The average worker receives no more benefits in 2008 than he or she did in 2004. In fact, they may receive less, but his or her out-of-pocket expense is greater now than compared to 2004.
By Kristen Gerencher
Americans with job-based health insurance saw their protection from higher out-of-pocket costs erode between 2004 and 2007, especially those who were sick and of modest means, according to a new study.
The majority of people with health insurance, about 160 million Americans, receive it through their jobs.
“American families with employer-based coverage were worse off in 2007 than they were in 2004,” said Jon Gabel, lead author of the study that was published in a June 2 Health Affairs Web exclusive. “This is during a period of time when the economy was expanding.”
The authors conclude that a growing number of people are underinsured, a term that refers only to what they pay out of pocket for medical services. Health-care affordability, which includes out-of-pocket costs plus employees’ premium contributions, also has taken a big hit.
Comparing expected health spending among different types of health plans, financial protection was greatest for those in health maintenance organizations (HMOs), the study found. Of five chronic conditions surveyed, patients with breast cancer suffered the highest out-of-pocket costs.
Workers faced an annual average of $729 in medical-services costs in 2007, including deductibles and other forms of cost-sharing such as co-payments and co-insurance. That’s up 34% from 2004, when the average out-of-pocket burden for those with employer coverage was $545.
With job-based health plans picking up 80% of total costs in 2007, they covered a slightly smaller percentage of overall expenses than they did in 2004 as more workers confronted plans with deductibles and as deductible levels were set higher, according to the study. But the main reason for rising out-of-pocket costs was the growth in overall health spending.
Going To Extremes
The report showed a widening gap between adults who need to tap their health insurance to cover medical visits and those fortunate enough not to need to use their benefits much. Adults with chronic medical conditions drove higher spending for both their health plans and themselves.
At the two extremes, the average out-of-pocket expense for the 50% of workers with the lowest health spending grew 23% to $85 in 2007. But expenses jumped 42% to $8,703 among the highest-spending 1% of workers, the study found. For the highest spending 10% of workers, the average out-of-pocket costs amounted to $3,364, an increase of 39% since 2004.
For some patients, co-insurance may seem like a small sum – set at 10% or 20%, for example, when services are from an in-network health provider – but costs can add up quickly as absolute dollar figures rise. Insurance paid for 84% of the bill for five selected chronic conditions: asthma, breast cancer, diabetes, chronic obstructive pulmonary disease and hypertension, the study found.
Breast-cancer patients faced the biggest sticker shock. Even though insurance paid for more than 90% of a bill that averages $66,489, they had the largest out-of-pocket spending, the study found. Breast-cancer patients paid an average $6,250 for their treatment. Patients with chronic obstructive pulmonary disease had the second highest out-of-pocket costs, at $2,200 a year.
“When that figure gets really high, even though you may be only paying 10% of the bill, it’s still a lot of money for somebody of modest means,” Gabel said. “For some high rollers…$6,000 for breast cancer is not much of a financial penalty, but it is for someone earning $30,000 a year.”
The researchers used simulated bill paying of actual claims histories in Thomson Healthcare’s MarketScan database to apply the spending of a large sample of adults to a representative national sample of employer-sponsored health plans.
In 2007, 71% of people earning 200% of the federal poverty level (about $41,300 a year for a family of four) who were among the top 25% in health-care spending were underinsured, the study found.
“In the United States, if you are sick and earn a modest income, then you are probably underinsured – even if you have employer-based health coverage,” the researchers wrote.
Overall, the recession may exacerbate the trend toward eroding financial protection as employers become more sensitive to the rising costs of workers’ health insurance, Gabel said.
“I would expect to see significant increases in cost-sharing in the next few years at a time when households are going to be less able to pay for it,” he said.
The study was conducted by researchers from the National Opinion Research Center and Watson Wyatt Worldwide, with funding from The Commonwealth Fund.
