Health-care costs hitting even those with insurance

The economic slowdown has swelled the ranks of people without health insurance. But now it is also threatening millions of people who have insurance but find that the coverage is too limited or that they cannot afford their own share of medical costs.

Even many of the 158 million people covered by employer health insurance are struggling to meet medical expenses that are much higher than they used to be — often because of some combination of higher premiums, less extensive coverage, and bigger out-of-pocket deductibles and co-payments.

With medical costs soaring, the coverage many people have may not adequately protect them from the financial shock of an emergency-room visit or a major surgery. For some, even routine doctor visits might now take a back seat to basic expenses such as food and gasoline.

Taking a bigger bite

The problem is most acute for people with no insurance, a group expected to soon exceed 48 million, but those with insurance say they too are feeling the pain.

"It just keeps eating into people's income," said James Corbin, a former union official who works for the local utility in Tucson, Ariz.

Corbin said that under their employer's health plan, he and his co-workers now are obliged to pay up to $4,000 of their families' annual medical bills, on top of about $1,600 a year in premiums. Five years ago, they paid no premiums and were responsible for only about $2,000 of their families' medical bills.

Already, many doctors say, the soft economy is making some insured people hesitant to get care they need, reluctant to spend a $50 co-payment for an office visit. Parents "are waiting longer to bring in their children," said Richard Lander, a pediatrician in Livingston, N.J. "They say, 'The kid isn't that sick; her temperature is only 102.' "

Since 2001, the employee's average cost of an annual health-care premium for family coverage has nearly doubled — to $3,300, up from $1,800 — while incomes have come nowhere close to keeping up. Factor in other out-of-pocket medical costs, and the portion of the average U.S. household's income that goes toward health care has risen about 12 percent, according to the consulting and accounting firm Deloitte.

In a recent survey by Deloitte's health-research center, only 7 percent of people said they felt financially prepared for their future health-care needs.

Shirley Giarde, of Walla Walla, was not prepared when her husband, Raymond, developed congestive heart failure last year and needed a pacemaker and defibrillator. Because his job did not provide health benefits, she has covered them both through a policy for the self-employed, which she obtained as the proprietor of a bridal and formalwear store, the Purple Parasol.

But when Raymond had his medical problems, Giarde discovered that her insurance would cover only $22,000, leaving them with about $100,000 in unpaid hospital bills.

Struggling to pay

Even though the hospital agreed to reduce that debt to about $50,000, Giarde is still struggling to pay it — in part because the poor economy has meant slumping sales at the Purple Parasol. Her husband, now disabled and unable to work, will not qualify for Medicare for another year, and she cannot afford the $758 a month it would cost to enroll him in a state-run insurance plan for individuals who cannot find private insurance.

She recently refinanced her car, a 2002 Toyota Highlander, to help pay for her husband's heart medicines, which cost some $400 a month.

Experts say that too often for the underinsured, coverage can seem like health insurance in name only — adequate only as long as they have no medical problems.

Companies and policymakers have yet to focus on what the faltering economy means for employees' medical care, said Helen Darling, president of the National Business Group on Health, a Washington, D.C., association of about 200 large employers.

"It's a bad-news situation when an individual or household has to pay out-of-pocket three, four or five times as much for their health plan as they would have at the time of the last recession," she said. "Americans have been giving their pay raise to the health-care system."

Sage Holben, a 62-year-old library technician with diabetes who is active in her local union in St. Paul, Minn., says that in 2003 union members agreed to a two-year freeze on wages to protect their health-care coverage. But for the union, which will begin talks on the next contract this fall, it may be difficult to continue that trade-off, Holben said.

"I live paycheck to paycheck," said Holben, who makes close to $40,000 a year at Metropolitan State University.

When she took the job in 1999, she says, the health benefits required no co-payments for doctor visits. Now, her out-of-pocket cost per visit is $25, and she pays $38 a month for her diabetes medicine. She has not been to the eye doctor in two years, even though eye exams are crucial for people with diabetes and she knows she needs new glasses. Nor does she monitor her blood sugar as regularly as she should because of the cost of the supplies.

Many employers do recognize that their workers are struggling financially, even as they are asking them to pick up more of their health-care bills.

Even so, more companies may see themselves as having little choice but to require employees to pay more of their health expenses, said Ted Nussbaum, a benefits consultant at the firm Watson Wyatt Worldwide. And when a weak economy undermines job security, he said, workers simply may have to accept reduced benefits.

While Nussbaum and other consultants say it is unlikely that significant numbers of employers will simply drop coverage for workers, the weak economy could prompt more of them to push for so-called consumer-driven plans, which tend to offset lower premiums with higher deductibles.

And while these plans often allow employees to put pretax savings into special health-care accounts, they typically end up forcing the worker to assume a bigger share of medical costs. About 6 million people are now enrolled in these plans.

Among employers, the hardest pressed may be small businesses. Their insurance premiums tend to be proportionately higher than ones paid by large employers, because small companies have little bargaining clout with insurers.