Rising healthcare costs put Americans in Catch-22


With the inexorable rise in the cost of health insurance coinciding with a reduction in overall benefits, many Americans are being forced to make decisions that could damage their long-term health.

The 2005 Health Confidence Survey released by the Employee Benefit Research Institute (EBRI) and Mathew Greenwald and Associates, Inc. is just the latest piece of research to confirm that the majority of Americans with health coverage have experienced rising costs in the past year.

Four out of 10 growing companies have increased the amount employees must contribute to their health insurance, more than a third (37 per cent) have increased deductibles and one in five have simply reduced medical benefit coverage options.

As a result, many of those questioned for the EBRI survey say they are changing their behaviour, with not all of these changes being in their best interests.

Eight out of 10 are choosing cheaper generic drugs, seven out of 10 are taking better care of themselves and almost six out of 10 are talking to their doctor more carefully about treatment options and costs.

Four out of 10 are delaying going to the doctor and one in five are not taking prescribed medications

But as costs spiral, four out of 10 are delaying going to the doctor and one in five are not taking prescribed medications.

"Delaying doctor visits and not taking prescribed medication could lead to a worsened condition and longer recovery time for the individual," said Jerry Ripperger, director of consumer health for the Principal Financial Group, which supported the research.

"For employers, beyond just increased health care costs, this behaviour can also lead to a decrease in worker productivity and an increase in absenteeism and presenteeism, potentially costing thousands of dollars.

"Multiply this by each employer in the United States, and we have a significant problem."

"With an ongoing focus on cost, employees are sometimes left to make decisions that are unwise for their long-term health, but in the short-term, benefit their pocketbook," Ripperger added.

"This is where health programs like high deductible health plans, health savings accounts and health reimbursement arrangements can ease the strain, because they provide desired coverage while sharing more of the cost between employers and employees."

The EBRI survey also revealed that health care costs are having an impact on Americans' long-term financial security.

Almost three out of 10 said that they had to use up all or most of their savings to pay medical expenses and nearly a quarter of respondents indicated difficulty in paying for basic necessities, such as food, heat and housing.

Eighteen per cent responded that they had to borrow money for medical expenses, while almost half (45 per cent) have had to decrease the amount they save to pay for health care expenses.

"As these responses illustrate, rising health care costs have led to an erosion of the safety net that Americans rely on for financial security should they become ill. The distress caused by rising health care costs goes beyond health care and into financial stability," Ripperger said.

Unsurprisingly, the survey revealed that if given the choice between a salary increase and increased health care coverage, the overwhelming majority of Americans would plump for better health care.

Eight out of 10 said they would prefer $6,700 in employment-based health insurance coverage to a similar-sized pay rise. Two-thirds would also prefer employment-based coverage to an extra $10,000 of taxable income.

"Consistently, we have seen that high-quality benefits actually encourage employees to work harder and result in a more motivated workforce," Jerry Ripperger concluded.

"While health coverage is not surprisingly the most important benefit to employees, it's significant that in today's economic environment American's value health insurance over a sizable salary increase."