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Published: Sunday, 9/16/2001 - Updated: 1 year ago

Health insurance at risk

As job layoffs mount in northwest Ohio and around the country, those left in the work force had better be concerned about maintaining their health insurance. That's the gloomy message from a survey of employers by the Kaiser Family Foundation.

The nonprofit research firm found that health insurance premiums soared 11 percent from 1999 to 2000, the highest single-year jump since 1992, dwarfing increases in overall inflation (3.3 percent) and the wages of nonsupervisory workers (4.4 percent).

What's more, double-digit increases in premiums are expected several years out. Businesses which have been patiently absorbing the extra cost are about to start passing it on to their employees in several ways, including higher co-pays for prescription drugs.

Some 64 percent of Ohioans and 62 percent of Michiganians have health insurance supplied by their employer, a factor that has helped insulate many people from this growing problem.

The Kaiser study surmises that the huge jump in premium costs is the result of “catch-up pricing” by insurers “as they attempt to restore profitability after a period of intense price competition in the mid-1990s.” But premium equivalents for self-insured employers also rose 9.5 percent last year, “a reflection of the growth in underlying health-care costs,” the study said.

It's worth noting that inflation in premium costs dove from 12 percent back in 1988 to only 0.8 percent in 1996, climbing steadily to 11 percent last year. A variety of factors undoubtedly are to blame for this extraordinary increase, but it is only logical to believe that the expensive advertising campaigns of the health insurers are a major reason.

The rising cost of prescription drugs - some 15.5 percent last year - is another significant factor and, again, advertising played a part. Since Congress passed a law allowing prescription drugs to be advertised on television, hardly a minute of airtime goes by without viewers being bombarded to “ask your doctor” for some brand-name drug or other. This is called creating a need where none previously existed, and the tactic is helping pharmaceutical companies become very rich. It has been reported that the industry now spends more on ads than on research and development.

Adding a prescription drug benefit to Medicare, as President Bush has promised, only seems destined to increase the pressure on health-care costs. While Congress is debating over Medicare this fall, lawmakers would be well-advised to consider some sort of cost-containment measure. Continued insurance coverage for millions of Americans could well depend on it.



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