Health Premiums Swell, U.S. Public Worried - Poll
Reuters - Tue September 9, 2003 02:31 PM ET
by Kim Dixon

CHICAGO (Reuters) - Politicians take note: Americans fret more about the soaring cost of health insurance than being a victim of a terror attack, according to a poll released on Tuesday.

The survey, conducted by the Kaiser Family Foundation, a nonprofit research group, also shows that health-care premiums are climbing at their highest rate in more than a decade, driven by steep prescription drug costs, pricey new medical technology and insurers' profit gains.

Monthly premiums for employer-sponsored health care in the United States jumped by 13.9 percent between spring 2002 and 2003, the sharpest spike since 1990, according to the study. And there is no let-up in sight, according to analysts.

"We should expect to see rates of increase that far outpace everything else, including profits," said Jon Gabel, vice president at the Health Research Educational Trust, which helped run the survey.

The results provide a "perfect snapshot of our national schizophrenia about health care," said Gerald Shea, government affairs analyst at the AFL-CIO umbrella union. There is a "pretty broad consensus that this is unsustainable," he said. "We can't have health inflation at five times the rate of inflation, it's going to break the bank."

The poll found that 33 percent of the insured worry that their income might not keep up with health premiums, while just 8 percent said they fear being a victim of a terror attack.

Spending on health care is set to hit 17.7 percent of U.S. gross domestic product by 2012, up from 14.1 percent in 2001, according to government estimates.

WORKERS FEEL PINCH, COMPANIES SHOP AROUND

Tussles over rising health-care costs are at the center of many labor talks between U.S. employers and workers, including Verizon Communications and the Big Three automakers.

And as the baby boom generation retires, the numbers of people on the U.S. retirement health program Medicare will swell. That's fueling a congressional debate about adding prescription drugs to Medicare, which now covers 41 million elderly and disabled.

Workers are feeling the pinch. Costs paid by workers out of their own pockets for prescription drugs and doctor visits jumped by at least 50 percent in just the last three years, the report found.

Another key finding: 62 percent of companies are shopping around to find a better health-insurance deal.

HMO PROFITS

Premiums are rising a bit less rapidly at big companies that take on the risk of health insurance themselves, so-called self-insured employers like General Electric Co.

This suggests that part of the rise in health-care premiums can be linked to HMOs' expanding profit gains, experts said.

To be sure, nearly every publicly traded HMO posted record profits in recent quarters, as they keep raising premiums to cope with underlying cost drivers: prescription drugs, hospital and doctor fees.

But it's inaccurate to cast HMOs as villains because they are just playing "catch-up" from an earlier period when premiums trailed cost increases, said Drew Altman, president of the Kaiser Family Foundation.

When HMOs start moving into new markets, or compete by seeking new members, premiums could begin to decline, experts said. But they added there is no sign of that yet.

The poll results were based on a telephone survey of 1,800 companies, taken from January to May.

Return to Foundation News and Publications