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Tuesday, September 26th 2006

The Vacuum Hose In One Pocket, Then The Other

The rate of increase for health insurance premiums has slown, according to a Kaiser Family Foundation study.

“To working people and business owners, a reduction in an already very high rate of increase just means you’re still paying more,” said Dr. Drew Altman, president and chief executive officer of the Kaiser Family Foundation, a health care research organization that annually tracks the cost of health insurance.

Altman said the rising gap between premium growth and wages is particularly startling when one takes a longer look back. Since 2000, health insurance premiums have gone up 87 percent; wages 20 percent.

“Yes, the rate of increase is down, but I don’t think anybody is celebrating,” Altman said of this year’s numbers.

The Kaiser Family Foundation’s findings are based on a telephone survey of 3,159 randomly selected private and public employers. More that 155 million Americans get their health insurance through their jobs.

“It’s worth observing that this survey comes out on the heels of the Census report showing that we added 1.3 million people to the ranks of the uninsured in 2005,” he said. “The long-term trend is very clear, and it’s the slow unraveling of coverage in the employment-based system, especially among smaller employers.”

Overall, the total cost of health insurance for individuals now averages $4,242 a year. For families, the costs average a whopping $11,480.

The survey also wasn’t impressed with the potential for CDHI,

In this year’s survey, Kaiser also looked at how many firms offer high-deductible insurance plans and health savings accounts. Such plans are being pushed aggressively by the Bush administration. They have lower monthly premiums, but that’s because they require consumers to pay more of the initial cost of their health care.

Kaiser estimates about 2.7 million workers are enrolled in high-deductible plans with a savings account. Employers or employees get a tax break when they put money in the accounts.

Altman said what struck him about that number is that the intensity of the debate in Washington over health savings accounts is completely out of sync with the reality of the marketplace.

“Just a modest number of employers tell us they plan to move to these arrangements next year. It’s a trickle, not a tidal wave,” he said. “Secondly, employers don’t have a great deal of confidence that any of the weapons at their disposal to control health care costs will produce big results.”

But hey, like here and here, we have to spend it on something. If its healthcare premiums rather than internet service and a television, should we flip out over that? And I understand every dollar increase reduces employer contributions to premiums and thus increases the number of uninsured. Keep in mind as well, those who don’t have insurance because “they can’t afford” it are self reported.

The real question we should be asking about premiums is not how fast they’re increasing compared to inflation, that is a scare statistic of limited value, but whether they’re overvalued yet.

I really don’t know the answer to that and I do think the Kaiser Family Foundation does excellent work, even if I don’t agree with some of their efforts. But, I really do think surveys like this have a very limited place in the debate.