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23
MAY / JUN 2012
Healthcare Journal of baton rouge
OP - ED
‘‘More than one-quarter of insured house-
holds reported problems with medical
debt and
nearly 6 out of 10 adults say they
have delayed care because of cost.’’
The U.S. Supreme Court is expected to rule on
reform’s
constitutionality before it adjourns in June. If it survives
the court challenge, it will at least face a political gauntlet – if not
its demise – if the Republicans capture the White House, Con-
gress or both in the 2012 presidential election.
If health reform survives, the U.S. healthcare landscape will change
more in the next decade than it has in the last 50 years. However,
health reform is mostly health insurance reform. Its overarching
goal was to attempt to ensure affordable access to health insurance
and medical care for most Americans. The landscape for employees
with health insurance benefits largely remained unaffected.
For Louisiana households with employer-sponsored insurance,
the larger issue is how expensive healthcare costs will be by 2020.
Nationally, about 20 cents out of every U.S. dollar will be spent on
healthcare in 2020. National medical inflation consistently has
risen two percentage points higher than the consumer price index
since the 1960s and there is no indication that will change.
In Louisiana, about 54 percent of businesses offered health insur-
ance to their employees in 2010, which is the national average.
If the state’s current healthcare cost and household income trends
continue at their current rates, here is what 2020 would look like for
Louisiana workers with a family policy from their employer:
• The average premium would be $22,694 compared with $13,529
in 2010, according to a recent Commonwealth Fund analysis.
• The average employee’s share of that premium would be about
$7,600, compared to $3,962 in 2010.
• The average deductible would be about $4,000, compared to
$1,999 in 2010.
• The average employee share of the premium and deductible
combined would comprise about 10.2 percent of Louisiana’s
projected median household income. A common rule of thumb
is that healthcare costs become a financial burden when out-of-
pocket costs reach 10 percent of household income.
The state’s per-capita healthcare expenditure in 2020 would be
$12,118, compared to $6,795 in 2009. That is based on Louisiana’s
annual medical inflation rate of 5.4 percent since 1991.
The household financial burden is already significant. About 40 per-
cent of Americans had trouble payingmedical bills in 2010, up from
34 percent in 2005. More than one-quarter of insured households
reported problems with medical debt and nearly 6 out of 10 adults
say they have delayed care because of cost.
The trend is clear for employer health insurance costs. A significant
percentage of businesses annually increase the employee share of
deductibles, co-payments, and premium costs – or cut benefits – to
minimize the impact on their bottom lines.
Who can blame them? Nearly 60 percent of an average company’s
after-tax profits are spent on corporate health benefits. Starbucks,
for example, spends more on health benefits for its workers than it
does for wholesale coffee beans.
Mostpeoplehaveonlyavaguenotionofhowvaluableemployerhealth
insurance can be. The median household income for a four-person
U.S. family in 2009 was about $70,300. However, the Congressional
Budget Office (CBO) estimates the true figure to be $94,900. A foot-
note on page 65 of a CBO budget forecast said this: “All income is as-
sumed to be from compensation, which includes employment-based
health insurance and the employer’s share of payroll taxes.”
Evenwith employer support, expect healthcare costs in 2020will be
an even larger household budgetary albatross.
Steve Jacob is a veteran health-care journalist and author of the new
book
Health Care in 2020: Where Uncertain Reform, Bad Habits, Too Few
Doctors and Skyrocketing Costs Are Taking Us.
He can be reached at steve@
unitedstatesofhealth.com.