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Love that Health Care, Hate the Cost

By Mary Agnes Carey, CQ HealthBeat Associate Editor

October 25, 2006 -- Rising health care insurance costs are cutting into Americans' ability to pay for basic necessities and save for retirement, according to a survey released on Wednesday.

The health confidence survey, supported in part by The Commonwealth Fund and published by the nonpartisan Employee Benefits Research Institute (EBRI), found that half (52 percent) of Americans are unhappy with the cost of their health care coverage, a record high in the nine years that EBRI has compiled the annual report. In addition, nearly half (48 percent) of those surveyed said they were unhappy with costs that insurance did not cover.

Most of the dissatisfaction among consumers was focused on health care cost rather than quality. More than half of Americans surveyed reported they are extremely or very satisfied with the quality of medical care they receive, the survey found.

"Health care cost increases are catching up to people," said Paul Fronstin, director of EBRI's Health Research and Education Program. "You see an increase in dissatisfaction and you see an increase in the percentage of people who are reducing their savings."

More than one-third (36 percent) of those surveyed said they have reduced their retirement savings to help pay for health care insurance, up from 25 percent in 2004, the survey reported. More than half (53 percent) have cut other savings to finance health insurance costs, and 28 percent of those surveyed said that higher health care costs have hurt their ability to pay for basic necessities such as food, heat, and housing, an increase from 24 percent.

Also, more than half of those surveyed (55 percent) said addressing rising health care costs should be a top priority for Congress and more than eight of 10 said they would favor tax breaks to help people pay for coverage they purchase on their own or through their employer.

Rep. John D. Dingell of Michigan, the ranking Democrat on the House Energy and Commerce Committee, said the EBRI study provides further evidence that the rising cost of health care insurance is hurting patients.

"Medical debt is one of the leading causes of personal bankruptcy, but instead of making the health care system more affordable for patients, the Republicans have made it profitable for the HMOs and health insurance companies," Dingell said in a statement.

The National Center for Policy Analysis, a conservative think tank, said that if consumers switched to health savings accounts (HSAs) or high-deductible health plans they would save money that they could put toward retirement or other expenses. "HSAs allow patients to take control of their health and their financial future," the group's senior fellow, Devon Herrick, said in response to the EBRI survey.

Other findings of the EBRI report include:

  • Three-quarters of those surveyed said they preferred having $6,700 in employer-based health care coverage instead of an additional $6,700 in taxable income.
  • Six of 10 Americans surveyed rate the health care system as fair (28 percent) or poor (31 percent). The percentage of individuals rating the system as poor has doubled since the inception of the survey in 1998, when the figure was 15 percent.
  • While most of the individuals surveyed said they have enough knowledge to talk to their doctors about their health care, just over one-third (37 percent) felt extremely or very confident they know enough to purchase health insurance on their own.

Financial sponsors of the survey included AARP, Blue Cross and Blue Shield and Pfizer Inc.

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