Health-care costs outstrip income in Colo.

Premiums for working families rise 74.8% but incomes rise only 15.5%

by Dale Rodebaugh
Herald Staff Writer

Article Last Updated; Friday, October 10, 2008 8:13AM

Colorado families have seen the cost of health-insurance premiums increase almost five times faster than family incomes in the last eight years, a statistic on par with the rest of the nation, according to a study released this week.

"What is so surprising is that coverage is thinner," Ron Pollack, executive director of Families USA, said in a telephone conference call Tuesday. "The economic downturn is making a bad situation worse. We're paying more for less."

The Families USA survey found that health-insurance premiums for Colorado working families increased 74.8 percent from 2000 to 2007 while income increased 15.5 percent.

Specifically, the cost of premiums (employer and employee shares) increased from $6,797 to $11,878 per year. The median family income rose from $26,390 to $30,476.

Families USA is described by Wikipedia as a liberal, nonprofit consumer health-care advocacy organization.

State-specific surveys were necessary because of regional cost differences and other factors, Pollack said. In Nevada, health-insurance premium costs increased 2.5 times faster than income, while in Michigan the difference was 17.1 times.

Nationally, the median increase in health-insurance premiums was 78.3 percent, while the median increase in family income was 14.5 percent, Pollack said.

Paula Dunne, a nurse and manager at Durango Urgent Care, is familiar with the plight of struggling families.

"People try to keep their premiums down by raising their deductible, hoping they don't need medical attention," Dunne said. "But if they need service, they often end up paying out of pocket because they don't reach the deductible."

Durango Urgent Care is getting busier; the same as similar clinics across the country, Dunne said.

"The whole urgent-care industry is booming," Dunne said. "People often can't find primary-care doctors, and attention in an emergency room is much more expensive. So they turn to urgent care where costs are lower."

Steve ErkenBrack, president of Rocky Mountain Health Plans, said spiraling health-care premiums are no surprise to anyone. But many of the causes are disconnected from typical inflation.

"A dozen factors drive up health-care costs," ErkenBrack said. "New pharmaceuticals, new procedures or the under-payment cost shift. If doctors treat Medicaid patients and receive two-thirds of what it costs, they have to make up the difference elsewhere. Or if the uninsured, who can't afford health insurance, are in an accident and are treated in the emergency room, the cost is spread across everyone else."

If the cost of treating the uninsured and the under-payment cost shift could be fixed, hospitals could reduce expenses by 30 percent, ErkenBrack said.

"We could get ahead of the curve with prevention and home health care," ErkenBrack said. "But it would require a systematic approach. We have to approach the solution as a community."

Joining Pollack on the conference call were U.S. Sen. Ken Salazar, D-Colo.; U.S. Rep. Diana DeGette, D-Denver; Denise de Percin, executive director of the Colorado Consumer Health Initiative; and Marsha Porter-Norton, a health-care consumer from Durango.

Salazar said he has held 30 hearings on health care in Colorado, where 900,000 of the state's approximately 5 million people don't have health insurance.

"The national health-care system is broken and the White House has been blind to the situation," Salazar said. "It's time for a new beginning."

Health-care reform must focus on prevention, electronic medical-record keeping, affordability, coverage that follows the insured even if they move, and the reduction of administrative costs, which now run around 30 percent - compared to 5 percent in the Veterans Administration, Salazar and DeGette said.

The cost of health care in the United States is about 16 percent of gross domestic product, compared to about half that amount in Japan, Germany and England, Salazar said.

Among the findings of the Families USA survey:
•For family health-care coverage, the employer's share of annual premiums increased from $5,261 to $8,849 and family contributions increased from $1,536 to $3,029.

•For individual health-care insurance, the average annual premium for employer and employee shares rose from $2,450 to $4,269. The employer's share increased from $2,041 to $3,509, while the employee share went from $409 to $760.

•Inflation-adjusted earnings - real earnings - showed that Colorado family income dropped from $29,303 in 2000 to $27,239 in 2007.

The Families USA survey called the health-care situation in Colorado "disheartening."

Rising health-care costs have forced employers to reduce or drop benefits or cut pay, the survey said. Small businesses are particularly hard-hit, which forces them to impose higher deductibles or increase co-payments.

In conclusion, the report said:
"In Colorado, health-insurance premiums are rising considerably faster than worker earnings. As a result, health-care costs are consuming ever-larger portions of family budgets and causing substantial hardships. If the trend continues, more and more families will inevitably join the ranks of the uninsured or underinsured."

daler@durangoherald.com