A Premium Sucker Punch
Sunday, January 25, 2009
Donna Carter hoped that her savings from lower gas prices would defray rising health insurance costs.
No such luck.
Carter, a technical editor for a District consulting firm and mother of twin boys and a girl, is facing steep increases in out-of-pocket expenses for health coverage this year. What she shells out for premiums and co-pays more than offsets any fuel savings. Her employer picks up 50 percent of the coverage for her family, up from 33 percent a few years ago. But because insurance costs have soared, she says she's actually paying $200 a month more in premiums.
Her co-pays also have risen to $30 from $20. That extra $10 adds up, Carter of Bowie says, with "accident prone" teenagers in and out of the emergency room: Her 19-year-old track star son suffered a lacerated liver, broken rib and concussion when he slipped and fell on wet pavement. Her 16-year-old cheerleader daughter who is asthmatic is in physical therapy three days a week for a dislocated knee. Carter and her other son contribute to the costs with visits to the doctor for serious flare-ups of asthma.
"Once or twice a month, somebody is at the hospital," said Carter, whose policy also covers her husband. "It's very difficult at this point to keep up."
A growing number of workers in 2009 will pay more for health benefits -- and in some cases receive less coverage -- as their employers grapple with the financial fallout of rising medical expenses and diminished revenue and profits, recent surveys of human resource officials show.
The Corporate Executive Board found in its survey that a quarter of officials from 350 large corporations said they had increased deductibles an average of 9 percent in 2008. But 30 percent of the employers said they expected to raise deductibles an average of 14 percent in 2009. Mercer, a global benefits consulting firm, surveyed nearly 2,000 large corporations in a representative poll and found that 44 percent planned to increase employee-paid portion of premiums in 2009, compared with 40 percent in 2008.
The economic slowdown, according to analysts, is making it more difficult for many employers to subsidize health care costs at previous levels. On average, experts say, benefit packages contain the biggest increases for workers since the recession of 2001. Workers' health costs are rising much faster than wages.
The cost-shifting is one more piece of bad news battering consumers, analysts said, reducing their spending power and giving them one more reason to hold on to their money. Adding to consumers' financial squeeze is the plummeting stock market, which has crushed retirement funds. Many companies, including Sears, Starbucks, FedEx and GM, have stopped matching workers' 401(k) contributions.
To cut costs, employers increasingly are introducing high-deductible "health savings accounts" and focusing on wellness programs aimed at keeping workers healthy through diet and exercise.
Employees are tightening their belts: Carter said her family no longer takes vacations to the Bahamas and Disney World; they stay home. They don't go out to dinner and the movies; they order pizza and watch TV. She clips coupons to save on food and buys clothes on sale.
She has stopped taking her daughter to the doctor whenever she gets a cold or sinus infection. Carter now tries over-the-counter remedies.