Tuesday, September 26, 2006

How much is health care choice worth to you? 

A new Kaiser Family Foundation survey released today shows that health care premiums in employer-sponsored plans rose 7.7% over last year.

This year�s survey recorded the slowest rate of premium growth since 2000, though premiums still increased more than twice as fast as workers� wages (3.8 percent) and overall inflation (3.5 percent). Premiums have increased 87 percent over the past six years. Family health coverage now costs an average $11,480 annually, with workers paying an average of $2,973 toward those premiums, about $1,354 more than in 2000.

�While premiums didn�t rise as fast as they have in recent years, working people don�t feel like they are getting any relief at all because their premiums have been rising so much faster than their paychecks,� said Foundation President and CEO Drew E. Altman, Ph.D.� To working people and business owners a reduction in an already very high rate of increase just means you�re still paying more.�

�The burden of a fragmented system of coverage falls heaviest on the small employer and their workers,� said HRET President Mary A. Pittman, Dr. P.H. �About two in five small businesses do not even offer health insurance, and those that do require workers on average to contribute significantly more to their premiums for family coverage.�

While there is substantial debate about consumer-driven health care, the survey finds modest enrollment in consumer-driven plans, with 2.7 million workers in high-deductible plans with a savings option, including those that qualify for Health Savings Accounts (HSAs). About 4 percent of covered workers are enrolled in such plans, a rate statistically no different from last year. Relatively few firms that offer other types of health insurance say that they are �very likely� to adopt high-deductible plans that qualify for an HSA (4 percent) or that are associated with a Health Reimbursement Arrangement (6 percent) in the next year.

This answers two things: First, that a substantial portion of productivity increases of workers over the last five years have been received in health benefits rather than wages. Whether this is a good or bad thing would be determined by whether you think the quality and quantity of health care you purchase now is better or worse, greater or lesser than what you bought five years ago. My car payments have gone up 60% over the last five years, but that's because I own two newer cars now rather than a newer but smaller one plus our beater.

Second, if you have the option of a no-cost health care plans and a high deductible plan, it appears you go do the one with no out of pocket cost. I'm just speaking off the top of my mind, but it seems to me that people are highly risk averse to paying for their own health care. This may help explain the continued fascination with single-payer plans, but as Kevin Fleming reports, the tradeoff for the comforts of having taxpayers pay your health care would include a reduced quality of care, periodic funding crises, politically driven inequalities, and of course labor strikes (as salaries of health care professionals are squeezed by a monopsonistic system.) Dr. Fleming also cites patient choice as a benefit; I am wondering how many individuals see choice as a benefit? If they did, single-payer would die a just death.