Risky business

Last year, Sue Holley turned 56 and she and her husband learned that their health insurance premiums, already $795 a month, would be going up to $950 a month—"more than our mortgage.”

So they switched from a plan with a $250-per-person deductible to one with a deductible of $2,400 per person, and crossed their fingers.

Holley, a dental hygienist, was able to secure a policy for the couple at $550 a month, with her employer paying $100 of that. They’re paying more in their 50s than they paid in the late 1980s and early 1990s when their three children were at home.

“It drives me crazy,” Holley said.

The couple would like to think about retiring, but, “one of the biggest things that’s holding us back is we have to be making an income to afford health insurance,” Holley said. “It kind of locks you out. You have to make decisions based on health insurance. It can drive your thinking, which doesn’t seem right in a country like this.”

The Holleys are not alone.

In 2004, the fourth consecutive year of double-digit increases, employer health insurance premiums increased by 11.2 percent, nearly four times the rate of inflation. The annual premium for one person under an employer plan averaged $3,695 a year (of which workers paid $558), while costs for a family of four averaged $9,950 (with workers contributing $2,661), according to a survey by the Henry J. Kaiser Family Foundation.

Total out-of-pocket spending on health care went up $13.7 billion, to $230 billion in 2003.

“Things have been bad for a long time and they’re getting worse,” said Joel Miller, senior vice president for operations at the nonprofit National Coalition for Health Care (NCHC) in Washington, D.C.

Employers have been passing the increased costs along to employees, denying raises or both, Miller said. All told, employers’ share of premiums have gone up 75 percent since 2000, and the average individual’s share has gone up 143 percent, according to the NCHC.

“That doesn’t count out-of-pocket costs,” Miller added. Those have risen 115 percent since 2000.

“It’s a major economic problem in this country,” he said. “It’s offsetting any wage increase people are seeing… It’s really going to hurt the country’s economy.”

While 120 million Americans find insurance through their employer, who often pays part of the premium, the self-employed, underemployed or unemployed must seek it elsewhere.

Chico resident Brenda Andersen, 63, is a retired real estate agent. After she was turned down for policies due to pre-existing conditions, she found “it was cheaper to buy group insurance,” so she joined—and later quit—the Association for the Self-Employed, which allowed her to buy a policy through Midwest National Life Insurance. She also pays $11.50 a month for a supplemental policy through the American Association of Retired Persons, which would pay $60 a day if she were to be hospitalized.

Andersen gets one month’s coverage free for paying a year in advance, at $5,150, and she has a $1,000 deductible, in addition to a deductible of $3,000 “per surgical incident” and a $25 copay for office visits. After the deductibles are met, the policy pays 80 percent of most costs.

On the PPO plan, Andersen can choose from among many affiliated doctors, but she is restricted to two visits per quarter, which meant that when her primary care physician examined a potentially cancerous growth on her head, asked her to come back for a second visit, and then ended up referring her to a dermatologist, she was out at least $200.

“I’m going to have to start timing my doctors’ visits,” she said, half-joking that she should have had her cancer scare in August, near the end of a quarter. To top it off, Andersen had such a hard time finding a dermatologist who would accept her insurance, take a new patient and schedule an immediate appointment that she ended up seeing one in Yuba City.

Last year, Andersen had a colonoscopy, little of which was covered by insurance. She owes Enloe Medical Center $3,000 for its role in the procedure. “I didn’t realize I was going to have to pay the bulk of that one test myself,” she said. “I’m paying them $100 a month and it will take me two and a half years to pay that sucker off.”

At age 65, she’ll be eligible for Medicare, which she hopes will be an improvement. In the meantime, she’s keeping her private policy, largely because it gives her piece of mind that if she is hit with an expensive medical problem, she won’t be “ruined” financially. She misses the days when her then-husband was a university professor, and their insurance covered everything down to monthly visits to the acupuncturist and massage therapist.

“There’s a level of frustration I wasn’t prepared for,” she said. “But what choice do I have?”

Blame for the state of health insurance costs in the United States has been cast at everyone from drug and insurance companies to the patients themselves.

“There’s a lot of blame all around,” said Miller, of the NCHC.

Medical technology has improved, but it’s also become more expensive, and patients are demanding the latest and getting it, he said. “There’s intense pressure to use new and costly medical products and services.”

But at the same time, insurance companies, drug companies and for-profit hospitals are seeing large profits.

In 2004, Health Maintenance Organization (HMO) companies saw an average 10.4 percent increase in profits, according to the independent Weiss Ratings, Inc., which focuses on the industry. That was a slowdown from 2003, when profits doubled, and 2002, when profits were 81 percent, or $5.5 billion.

The research arm of the California Nurses Association reported last month that the world’s 13 largest drug companies posted $62 billion in profits in 2004, while the 20 largest HMOs took in $10.8 billion. The top 12 HMO executives were paid $222.6 million in direct compensation, while their drug company counterparts took in $192.7 million.

Last year, state Insurance Commissioner John Garamendi called on health insurance companies to defend the profits amid the huge hikes in premiums.

Chico newcomer Rich Drouillard feels lucky.

He’d worked for a company called General Dynamics in Santa Barbara for more than 16 years when it announced it was closing the factory in December 2004. His severance package included the same health coverage he’d been receiving, and when Drouillard, 60, officially retires in two years, he’ll continue to receive a company-backed policy.

Since his recent move to Chico, Drouillard has had no trouble finding doctors who accept his Blue Cross PPO.

The best part: His share of the premium is only $21.67 a month. The doctor’s visit copay is $20, and for prescriptions it’s $8. He’s been to the doctor once in Chico, for tests, and “everything was paid for.”

He did choose to continue dental coverage through COBRA, at $34 a month, even though he’s not sure it’s worth it.

COBRA, the Consolidated Omnibus Budget Reconciliation Act, gives most workers the right to extend their group health benefits after leaving their job or losing coverage due a reduction in hours. But they must pay both their share and that of the employer, plus an additional 2 percent. Only 7 percent of those eligible for COBRA opt to take it, since premiums average nearly $700 a month for family coverage or $250 for individuals, according to the NCHC.

Even with his coverage, which he describes as “great,” Drouillard has noticed some flaws in the system. “The insurance companies get special pricing,” he said, which doesn’t seem fair. His cancer screen cost $2,500, and, “the insurance company paid less than half that and they take it.” Patients paying out-of-pocket are billed the full invoice price.

“It just seems backward—the insurance company pays less than the people that can’t afford it,” he said.

And there are those who can’t afford insurance at all.

According to the U.S. Census, 45 million Americans—15.6 percent—were uninsured in 2003. That accounted for a increase of 1.4 million uninsured persons between 2002 and 2003. Young adults ages 18 to 24 were least likely to be insured.

“Unfortunately, many low- or median-range workers simply can’t afford the premiums,” said Miller, of the NCHC.

Even if they find a private policy they can afford, there’s an increasing chance that the insurer could turn them down—consumers have reported being rejected for conditions as common as acne or having had certain medical tests, even if they proved everything was fine.

The social costs of being uninsured are high, Miller said.

“It prevents people from accessing the health care system,” he said. “It tosses up other barriers. … You could incur major out-of-pocket expenses. When people go uninsured, the majority postpone needed medical care.

“You’re playing Russian roulette by delaying needed care. Your condition could become much more serious.”

Chris Powers, a divorced mother of two in Chico, feels fortunate to have found and qualified for Healthy Families, a medical, dental and vision plan backed by the state of California thanks to federal funds. “I tell everyone I know if they can do it, go and try and get in.”

She heard about Healthy Families six years ago. Since the program won’t enroll children currently covered under an employer’s policy, Powers had to take out catastrophic insurance on her children for three months and then sign them up.

Although it is income-based, Healthy Families is insurance, purchased privately through Blue Cross, Blue Shield and other big-name carriers. Last week, Gov. Arnold Schwarzenegger proposed a $72 million plan to spread the word about children’s health coverage available through Healthy Families and MediCal. (Children whose parents earn too much for MediCal often qualify for Healthy Families.)

Powers pays a combined $24 a month to insure her two sons, ages 6 and 9.

Well-child visits are free, and, “If they do get sick, it’s a $5 copay.” Prescriptions, too, are usually $5.

Powers, 33, works part-time as a massage therapist and waitress and has no insurance for herself.

She doesn’t sound worried; she’s healthy. “Knock on wood.”

In the Chico Unified School District, teachers have seen their benefits plans shrink twice in the past four years. Deductibles and copayments were added, and out-of-pocket expenses increased.

George Young, president of the Chico Unified Teachers Association, said teachers used to assume, “I know I’m not going to make a lot of money but at least my benefits are going to be great.” That’s not the case anymore.

Still, Young recognizes teachers and other government employees are better off than most when it comes to health insurance.

“I think everyone should have great insurance,” he said, and rather than begrudging public employees or those whose unions have negotiated better deals, citizens should advocate for better coverage for all.

The NCHC is among the groups advocating for universal coverage, with ideas including expanding public programs like MediCal, Medicare and children’s subsidized insurance so more can qualify. Currently, income caps and age eligibility caps (usually 18) shut many out.

“If all else fails, we feel that we should go to a universal healthcare system that is financed through a tax system,” Miller said. “We can get a lot more people covered and save money.”

Cries of “socialism” would be unfounded, Miller said, because, unlike forms of the “single-payer” system some seek, the government would not own the hospitals, employ the physicians or extensively regulate care.

“We hope it is going to be significantly ramped up this year as we head into the mid-term elections,” Miller said. “There’s a lot of uncertainly on behalf of citizens and voters.”

“There should be health insurance for all citizens,” he said.