Health Insurance Costs Soar in N.Y.

Out-of-pocket payments rose 54% between 2001 and 2003

MONDAY, May 10, 2004 (HealthDayNews) -- New Yorkers are feeling the punch in the pocketbook from rising health insurance costs.

Working families in the Empire State saw a jump of 54 percent in their out-of-pocket premium costs for health insurance between 2001 and 2003, according to a report released Monday by The Commonwealth Fund.

On average, the annual premium jumped from $7,944 in 2001 to $9,612 in 2003 for family coverage, with the worker paying $1,392 in 2001 and $2,148 in 2003. Employers' average share of the insurance costs jumped from $6,552 to $7,464.

"Everyone's costs across the country went up," said Jennifer Edwards, one of authors of the study, titled Employer-Sponsored Health Insurance in New York. The survey polled 576 New York State firms.

The good news, she added, is that employers are receptive to a wide range of approaches to make insurance coverage more available and affordable for their workers. "We asked employers how interested they would be in helping workers get in to these programs," she said.

She referred to programs such as Healthy New York, Family Health Plus or Child Health Plus. Each has a different wage threshold for workers to qualify. For instance, she said, a worker earning $30,000 or less a year can qualify for the Healthy New York program, Edwards said.

"Half of the employers expressed interest in subsidizing premiums to enroll their low-wage workers in Family Health Plus or Child Health Plus," Edwards said.

Part of the problem, Edwards and her team found, was that employers have limited familiarity with the public programs available to cover low-wage workers.

The survey polled firms within New York City, its five suburban counties and across the rest of the state. Many questions from a Commonwealth Fund 2001 study were repeated, so the researchers could analyze trends.

Besides raising the share of health insurance premium shouldered by the employee, employers are also delaying the start of benefits and increasing the cost-sharing at the point of service, such as the co-payment for a doctor's office visit, the survey found.

Other findings include:

  • Health maintenance organization (HMO) premiums are lower than preferred provider organization (PPO) premiums and are more often chosen by upstate firms than city firms;
  • Despite the cost increases, employers believe that offering health benefits to workers helps them recruit and retain employees;
  • About 60 percent of firms statewide with three to nine workers offer coverage, while nearly all firms with 200 or more workers do;
  • And employers are likely to delay the start date of benefits, with more employers not offering them until workers have been on the job for three months or longer.

"We are working at both the national level and in New York to try to identify some options for lowering the cost of health care," Edwards said. Her advice for employees? "Check around. Some plans have lower out-of-pocket costs. HMOs are cheaper than PPOs."

In the future, Edwards said, workers should expect even more "cost-shifting," with their employers asking them to pay even higher shares of the insurance premiums.

Another expert, John Holahan, director of the Health Policy Research Center at the Urban Institute in Washington, D.C., said increases are not surprising but he finds the amount of increase found startling. "The 50 percent is kind of shocking," he said, referring to the jump in employee contributions to their health insurance coverage.

"My guess is it will result in employees turning down [employer-provided] coverage," he said. "They'll decide to go bare."

A better alternative, he agreed, is to check out the public programs meant for lower-wage workers. Or, to keep perspective, he added, staying in the employer-provided program is less expensive than having to get individual health insurance coverage.

More information

Read the report by going to The Commonwealth Fund. To learn consumer tips on health insurance, visit the Georgetown University Health Policy Program.

SOURCES: Jennifer Edwards, Dr. P.H., director, Health Care in New York City Program, The Commonwealth Fund, New York City; John Holahan, director, Health Policy Research Center, Urban Institute, Washington, D.C.; The Commonwealth Fund report, Employer-Sponsored Health Insurance in New York
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