Employers and families pay higher premiums for less benefits

The Commonwealth Fund on Dec 2, 2010 issued a report saying that health insurance costs for U.S. families and employers have increased drastically in recent years while the benefits relative to health insurance premiums have been on the decline.

The report says the health insurance premiums for business and their employees increased 41 percent across states fro 2003 to 2009 while per-person deductibles increased even more, by a whopping 77 percent.

At the rate prior to the passing of the Affordable Care Act or the healthcare reform law,  the average premiums for family insurance coverage are expected to increase 79 percent to more than $23,000.

Not all states have experienced the same increase.

The lowest increase or a less than 14 percent increase in the health insurance premiums from 2003 to 2009 was found in states including Utah, Missouri, Iowa, Minnesota, North Dakota, New Hampshire, Rhode Island, Connecticut, New jersey, Virginia, Delaware, Massachusetts and Washington.

The states where the increase was found at 16 to 17 percent included Florida, Louisiana, Mississippi, Arkansas, Oklahoma, Tennessee, South Carolina, Arizona, North Carolina, Kentucky, Wyoming, Montana, Idaho, Maine, and Washington DC.

The states where the highest increase in health insurance premiums was found were New Mexico, Texas, and West Virginia.

All other states have increased health insurance premiums by 14 percent to 15.9 percent.

By 2009, the highest health insurance premiums were found in Alaska, Connecticut, Massachusetts, Vermont, Wisconsin and Wyoming, with family premiums in those states exceeding $14,000 a year. 

States where premiums ranged from $11,000 to $12,000 per year by 2009 included Alabama, Arkansas, Hawaii, Idaho, Kansas, Montana, North Dakota, Ohio, Oklahoma, South Dakota, and Utah.

The Commonwealth Fund says if the healthcare reform succeed in slowing premium growth by 1 percent annually in all states, employers and families will save $2,323 annually for family coverage by 2020 compared to the projection based on rates before the law was enacted.

Cathy Schoen, M.S. is Senior Vice President for Policy, Research and Evaluation at The Commonwealth Fund and colleagues say the cost can be reduced through some previsions of the healthcare reform law:

Restrictions on insurance administrative costs will improve value, directing more premium dollars to medical care.

States will have the authority to review and question unreasonable premium increases for all markets. In addition, states will be able to exclude insurers found to display a pattern of unreasonable premium increases from the new health insurance exchanges. 

The new health insurance exchanges, starting in 2014, will assure individuals and small employers that plans include essential benefits and protection against high medical bills. 

Starting in 2014, more affordable health insurance options will be available to low- and moderate-income families through exchanges, with federal premium credits to help buy insurance and expansion of Medicaid to low-wage workers and their families. 

Payment and system reforms will provide physicians and health systems with financial incentives and support to provide better care and reduce waste and duplication.

Jimmy Downs