Healthcare costs spike ever higher

Pay more, get less.

That's what millions of Americans will hear from their employers this year, as healthcare costs keep spiraling upward, even as the quality of care deteriorates.

Health-insurance premiums have spiked more than 12 percent in the past year, the largest increase since 1990. If you account for inflation, that's the largest increase ever.

And it has left employers like Greg Hunt in a bind. Health insurance is already one of his biggest expenses. To keep providing it, particularly in these tough economic times, he's finding he has to increase his employees' deductibles and cut back on benefits. "Costs are absolutely astronomic," says Mr. Hunt, of Amsterdam Billiard Clubs in Manhattan, a small business with 30 employees.

Those steep premium increases are just the latest sign of trouble. The number of uninsured, already more than 43 million, is on the rise. Hundreds of thousands of recipients of Medicaid – the health program for the poor – are losing benefits as states grapple with huge budget deficits. And senior citizens are finding it more difficult to access care.

The situation is similar to the late 1980s, when increasing health costs alarmed the middle class, prompting the first major debate on healthcare reform in a generation. While that didn't lead to any fundamental changes within the system, the debate, combined with the growth of health-management organizations, did help rein in the cost of care in the short term. By the end of the 1990s, however, the cost of health care was again increasing in the double digits.

Now, many experts say, the situation is even worse than a decade ago. And the prospects for major reform this year are slim. "The problem is more serious than it's ever been, and it's only going to get worse," says Henry Simmons, president of the National Coalition on Health Care, the largest US alliance of business and professional groups working for healthcare reform.

A survey done for the Kaiser Family Foundation, which identified the premium increases, also gives an indication of what this means for individual workers and their families. For single coverage, the employee's share now costs an average of $454 per year. That's $95 more than last year, an increase of 27 percent. Family coverage averaged $2,084, 16 percent more than last year.

Those costs will continue to go up in the foreseeable future. Seventy-eight percent of large firms said they were "very or somewhat likely" to increase the amount employees pay next year.

And while workers are paying more for premiums, many are also paying higher out-of-pocket expenses. Deductibles at preferred-provider organizations – the networks of doctors and hospitals that work with specific insurance companies – were up 37 percent. In addition, more workers are receiving fewer benefits, even as they're paying more. That's the first time in four years that's happened.

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