Health care costs outpacing wages

Health insurance costs in Washington state far outstripped increases in worker’s pay over the past six years, at a rate more than eight times that of the increase in the typical pay of working families.

This finding was part of a national analysis of the cost of health care premiums relative to workers’ earnings conducted by Families USA, a Washington, D.C.-based nonprofit health care advocacy group.

“Washington state actually had a worse situation over the last six years than what is experienced around the rest of the country,” said Ron Pollack, the organization’s executive director.

Premiums rose slightly faster in Washington than in many other states, he said, while earnings increased slightly slower.

“That’s why people in the state are experiencing a greater pinch over the last six years, greater than elsewhere,” Pollack said.

In Washington, health insurance costs rose by 89.2 percent, according to the study, while median earnings for employees working a 40-hour week increased by 11 percent over the six-year period.

The study found that big increases in health insurance hit employers and employees.

For example, the employer’s portion of annual premiums for family health coverage in Washington rose from $4,580 to $8,814 between 2000 and 2006, an increase of 92.4 percent.

The worker’s portion of those annual premiums rose from $1,916 to $3,479, an increase of 81.5 percent.

Meanwhile, the study found median earnings increased 11 percent during the six-year period, from $26,761 to $29,717.

Washington’s increases in health care costs relative to growth in wages trailed only South Carolina, Tennessee and Ohio.

In exam rooms, physicians hear almost daily from patients worried about out-of-pocket costs, sometimes asking, ‘Can I put this surgery off?’ ” said Mark Mantei, chief operating officer at The Everett Clinic.

The high costs of health insurance puts more people at risk of becoming uninsured, Pollack said, in a state where an estimated 800,000 people don’t have health insurance.

Those who can afford insurance often are paying more and getting less coverage, he said, with higher deductibles, co-pays, and fewer benefits.

Workers in the lowest one-third of income levels are disproportionately affected by increasing health care costs, said Dr. Bob Crittenden, chief of family medicine at Harborview Medical Center in Seattle and a national board member of Families USA.

They pay an average 17 percent of their income on out-of-pocket health care costs, he said.

The nonprofit Community Health Center of Snohomish County has seen the impact of rising costs of health care demonstrated in two ways: a jump in the number of uninsured patients and rising health care costs for its own employees, said Ken Green, executive director.

The number of uninsured patients seeking health care increased 27 percent in the 12-month period ending in June, he said.

Meanwhile, the organization has seen increases in health care premiums for its own employees in recent years of 20 percent to 30 percent three years in a row, he said.

“Our premiums are so high,” Green said. “It’s a recruitment and retention issue for us.”

There’s not a lot of competition among health insurers or health plans in Washington, Green said, with the three biggest being Regence BlueShield, Premera Blue Cross and Group Health Cooperative.

“The biggest employers tend to self-insure, which pulls them out of the marketplace,” he said. “That leaves smaller employers with limited options on how to provide coverage for employees.”

Small businesses are particularly hard-hit with the costs of health care, Pollack said. If just one or two people come down with a major illness or injury, coverage costs can skyrocket.

In October, a state report found that in Washington, the two biggest groups of workers without health insurance are people who are self-employed and those working for small businesses.

Although the cost of health insurance has been rising, the rate of increase has begun to slow, said Charlie Fleet, a spokesman for Regence BlueShield.

The Kaiser Family Foundation in California recently found that during the last year, the national increase in health insurance costs was 7.7 percent, he noted.

“Still, it’s twice the rate of inflation,” Fleet said.

Consumers do have ways of controlling costs, he said. For example, his organization found that a 1 percent increase in the number of its consumers switching from name brand to generic drugs results in a savings about of $12 million.

The Everett Clinic has bucked the trend of increasing heath care premiums for its employees, said Mantei, its chief operating officer.

Despite having a work force of 1,650 employees, there’s been no increase for the past two years, he said.

“We’ve really started to focus on wellness and preventive care,” Mantei said.

And careful management of what can be costly diseases, such as high blood pressures, asthma and heart problems, has helped control costs, he said.

Yet the organization still expects to pay $8 million next year for employee health care benefits, he said.

When discussion turns to increasing health care costs, “We always think of what the individual pays in out-of-pockets expenses,” said Crittenden, the Harborview physician.

“It’s clear that the biggest impact of all of this is the suppression of wage growth.”

Health care costs