Wednesday, October 01, 2008
Study: Health care eating more into wages
Premiums rose four times faster than wages between 2000 and 2007, one group says.
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Escalating health insurance premiums for Virginia workers are outpacing wage increases and threatening to leave more families underinsured, according to a consumer health advocacy group.
Virginia workers saw family health insurance premiums increase 82.5 percent from 2000 to 2007, while median earnings in the state rose 20.2 percent, according to a report released Tuesday by Washington-based Families USA.
That means premiums rose slightly more than four times faster than wages.
"Families in Virginia are spending more and more and receiving less and less, and it means more Virginians are at risk of joining the uninsured or underinsured," Ron Pollack, executive director of Families USA, said Tuesday.
The nonprofit national health advocacy organization analyzed data from the U.S. Census Bureau, the U.S. Department of Labor and the U.S. Department of Health and Human Services for the study.
Families USA plans to release individual state reports by the end of this month.
Pollock said he anticipates the news will be grim for all the states, as a trend appears to continue that health care costs are going up.
"All the data directions are terribly troublesome," he said.
That includes the impact on businesses, Pollock said, noting that the report not only looked at how much more health coverage is cutting into employee paychecks, but also the cost to employers.
The study found the portion of premiums paid by Virginia employers on family health plans rose 81.4 percent, while the portion paid by employees increased 84.9 percent.
As businesses are gearing up for benefit enrollment periods this fall, the study offered a glimpse into the annual discussions executives have as they grapple with how to provide employees with a meaningful benefit.
"It's something we make sure our employees understand," said Krista Jones, human resources manager at Christianburg-based Comprehensive Computer Solutions Inc.
"We are telling them that we may not be able to always cover what we do now. ... This is a year-to-year decision we make."
The company, which is better known as CCS-Inc., pays an average of 66 percent of the premium for its approximately 90 employees.
"But we still pay for the employee and the family members. Most companies now are not covering families or are only covering a portion of the family," Jones said.
At Roanoke-based Spectrum Design, the company has opted to take a different approach.
Spectrum covers 100 percent of the health care benefit for its 40 employees, although it doesn't pay for additional family members, said Dina Daniels, director or HR and accounting.
"It's our most expensive benefit," Daniels said. "The principals of this company want to take care of their employees, and it's something that's important to them."
Still, Spectrum saw about a 12 percent increase in premiums last year that it had to absorb.
Over the past seven years, CCS-Inc. has averaged about a 6 percent annual increase, Jones said, adding that cost-of-living increases do not exactly correlate with benefit increases.
Global HR consulting firm Mercer predicted last month that health care costs would continue to rise in 2009, but at a slower pace of 5.7 percent.
Joyce Waugh, interim president of the Roanoke Regional Chamber of Commerce, said it's important to look at the rising cost employers are paying for health care as part of a total compensation package.
"I think keeping a perspective is very important," Waugh said. "Companies have to make some pretty tough choices. If one of those is you don't get a bonus because of growing health care costs, that far outweighs not getting health coverage."
The strain on employers is also acknowledged by those in the insurance business.
"We understand that rising health care costs is an issue that is impacting many Virginians and we share this concern," Scott Golden, spokesman for Anthem Blue Cross and Blue Shield, said in an e-mail.
"We hear this everyday from our customers and the business owners who offer our products to their employees"
Golden said the increase in people using the health care system continues to be a main reason for driving up health care costs.
Additionally, he pointed to costly medical technology advances and rising prescription drug costs as other factors.
The sum of the problem adds up to what Pollock called "a triple whammy" of skyrocketing premiums, relatively smaller wage increases and a larger health care burden on employers.
"It's a bad situation and it is clearly growing worse," he said.
