Health Premiums Double In Decade

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Connecticut’s private employers have seen the price of health insurance premiums for workers and their families rise 102 percent since 1999, an analysis by C-HIT shows. The amount that families pay for this coverage rose an even steeper 107 percent.

The increases came during a decade when median household income in Connecticut grew by less than one third.

C-HIT’s review also found wide geographic variations in the insurance premiums charged for Connecticut families.

Workers in Fairfield County, specifically the Stamford-Norwalk-Bridgeport area, pay an average family premium of $13,612 – a lower rate than for those living around Hartford, where it’s $14,251, or New Haven, which tops the state at $14,884.  The average in the rest of the state is $13,649.

The C-HIT analysis also found that state employees pay considerably less, on average, for family premiums than do workers for private businesses. For example, in fiscal year 2009 state employees enrolled in the Anthem point-of-service plan paid $2,447 toward health insurance, or 15 percent, with taxpayers covering the rest of the $16,278 premium.

For employees in the private and non-profit sectors, the average 2009 contribution was $3,511.

Geographic differences in health premiums are not uncommon within states. But Connecticut’s variations run contrary to most states, where “higher premiums are charged for residents and workers in locations where health care expenses are typically higher,’’ according to a 2008 report on regulating the individual health insurance market from the U.S. Department of Health & Human Services. In Connecticut, health care expenses are typically higher in Fairfield County than in New Haven or Hartford counties.

The differences may be tied to the overall health of the regions’ populations, more than to the cost of care, said James Stirling, an advisor to Small Businesses for a Healthy Connecticut and president of Stirling Benefits in Milford, a benefits plan administrator.

“Insurers are in it equally to make money in Fairfield County, Hartford and New Haven,” he said. But, he added, “There is a correlation between affluence and health…Wealthier people tend to be in professions that are sheltered from negative health effects” and may have different health plan designs—meaning they get more of a break on premiums because they can afford to pay higher deductibles. The Hartford and New Haven areas also tend to have more unionized employers, who may offer “richer benefit plans than non-union plans, and so they cost more.”

The insurance figures come from the federal government’s Medical Expenditure Panel Survey, or MEPS—a set of yearly surveys of families and individuals, medical providers, and employers. They illustrate both how much health care premiums have risen in Connecticut and how, in some respects, the state is fortunate.

{media_1}Nationally, on average, the increase in average family premiums between 1999 and 2009 was 115 percent, slightly higher than Connecticut’s increase.  In 1999, Connecticut had the highest average family health insurance premium in the country; by 2009, it ranked seventh.

Still, the U.S. average premium of $13,027 is well below Connecticut’s, the C-HIT review shows. The MEPS figures show that Connecticut’s family premium on the commercial market increased from an average of $6,958 in 1999 to $14,064 in 2009.

“There’s no disagreement. Costs are rising too rapidly for the state to absorb for its employees, and for employers to absorb for their employees,” said Vicki Veltri, the state’s health care advocate.

Health insurance costs and the bite they take from employers’ budgets and workers’ pockets are front and center in Hartford, where lawmakers and lobbyists are debating a measure that would implement insurance pooling, Connecticut’s version of health care reform. Last week the House approved a bill that allows municipalities and nonprofit agencies to buy into the state employee insurance program. The bill, which goes to the Senate, establishes an Office of Health Reform and Initiative to help implement federal and state health care reform.  And the Obama administration on May 19 issued a new rule requiring insurance companies to justify proposed rate increases above 10 percent in individual and small-group markets.

The federal insurance data demonstrates just how complex Connecticut’s insurance picture really is.  Hidden in the average family premiums are variations that go well beyond the type of coverage a family or employee buys. The type of job a person holds and the size of an employer, as well as location, all have an impact on insurance rates.

What We Do Know

What’s striking about the MEPS data is how different the health insurance picture looks for different Connecticut residents.

Besides variations in the overall cost for family premiums, there are differences in how much workers are asked to contribute to those premiums.

While average family premiums in Hartford may be higher than in Fairfield County, for instance, the families of workers around Hartford contribute less on average toward coverage—$3,389—compared to $3,761 around Stamford-Norwich and $4,004 elsewhere.

A worker’s type of employer also affects what he or she pays.  Employees in incorporated firms faced an average family premium of $13,501 in 2009, compared to $14,251 for those in unincorporated firms, and $15,658 for those employed by non-profits.  But people working for non-profits paid only 17 percent of their premiums, or $2,704, on average, while those working for incorporated businesses paid $3,799, or 28 percent.

The state’s lowest-paid private-sector workers – those in the bottom wage quartile – faced the lowest family premiums, $12,746 on average.  But they paid a higher percentage of that premium and more in dollars—- $4,211 – than workers who earned more.  Those in the highest quartile contributed on average $3,094 toward their family insurance

What We Don’t Know, Why It Matters

For policy makers in Hartford who are trying to come to grips with health care costs, these insurance figures tell only a part of the story.  They say nothing, for instance, about the quality of insurance coverage.

“I tell a lot of my clients, ‘I can’t believe what you paid for this,’” said Ellen Andrews, who runs the Connecticut Health Policy Project and advises people having trouble with their insurance coverage.  “A lot of them would have been better off just putting their money under their mattress.’’

The state Insurance Department “does not collect data on health insurance costs,’’ said spokeswoman Donna Tommelleo.  And insurance companies consider the factors underlying premiums to be proprietary information, and don’t supply it.

Veltri said, “What I would really like to see reported in some fashion – so it’s transparent – is the correspondence between the actual premium dollars and the breakdown of the dollar for medical costs, actual utilization, mandates, commissions and so on.’’

She added,  “Controlling these costs will be really important, but nobody knows for sure exactly where all these costs are coming from.’’

In fact, says Stirling, “There’s a lot of us who think transparency will do more to reduce the cost of health care than any other regulation. If a consumer could find out for every health plan how much is going to claims, how much to marketing and sales costs, how much to shareholder profit, they’d be much better informed. Just as when we go to buy a new car there’s a wealth of data available on pricing, if we had similar access to data about health plan costs and about insurers, the consumer would be driven to be a better consumer.”

Jeannette DeJesus, the governor’s special adviser on health care reform and deputy commissioner of the state’s Department of Public Health, argues that as federal health care reform moves forward, some of these issues will be resolved.

“We don’t have specific information about how each dollar is allocated,” said DeJesus. “But we do know within (federal) health care reform that there are requirements that will ensure that most of our dollars will go toward medical claims and not administrative costs.  That will give us confidence that dollars are being spent on actual medical care.’’

A federal health care reform provision requires insurance companies this year to spend no more than 20 percent of the premiums they collect from individuals and small-group plans on non-medical and administrative costs, and no more than 15 percent of the premiums from large-group plans.  Aetna was the first to file a proposal with the state to cut individual health-plan premiums by an average of 10 percent.  Other insurance companies will likely follow Aetna’s lead.

And the insurance market will change once the state’s health insurance exchange – a feature of the federal law that DeJesus describes as a ‘’bazaar’’ in which insurers offer their premiums – is up and running.

DeJesus heads the group working to implement the insurance exchange.  “If we build an exchange where there is transparency and quality and the very best of nonprofit, business and government management, that will drive insurers toward higher-quality, better products, ‘’ she explained.  “If we do that, then we are more than halfway there with regard to pricing.’’

The Fund For Investigative Journalism supported this work.






One thought on “Health Premiums Double In Decade

  1. More context please.

    In 1990 the state budget was a tad over $7 billion.

    By 2000 it was just under $11 billion, in 2011 it will be over $19 billion an 80% increase over 2000. 

    Connecticut’s population in 1990 3.3 million in 2025 it will have increased to 3.7 million.

    FYI -there is reporting by the state on health plan profits, provider costs and administration costs.