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Study Finds Cost-Shifting Drives Up Premium Costs

JUNE 8, 2005 -- To help cover the cost of treatment for the nation's ballooning number of uninsured, premiums for family health insurance provided by private employers will increase by an average of $922 this year, according to a report released Wednesday.

Issued by the consumer organization Families USA, the study found that by 2010, health insurance premiums for families who are insured through their private employers would, on average, increase by $1,502. In addition, the study indicated that health insurance premiums for individuals are, on average, $341 higher in 2005 and would increase by an average of $532 by 2010.

The report—described as the first to quantify the dollar impact on private health insurance premiums when doctors and hospitals provide treatment to the uninsured—also showed that the cost of health care provided to people without health insurance that is not paid out of pocket by the uninsured would exceed $43 billion nationally in 2005. That figure, according to the study, would soar to more than $60 billion by 2010.

"I think the bottom line message here is that these costs of the uninsured certainly affect everyone," said Ron Pollack, executive director of Families USA.

Stressing that the large and increasing number of uninsured Americans was no longer just an "altruistic concern" because of its wide-reaching impact, Pollack highlighted the importance of Medicaid as a safety net. He added that cuts to Medicaid could lead to an increase in the nation's uninsured population, thus compounding the cost issue highlighted by the report.

Sen. Gordon H. Smith, R-Ore., who said he was working on bipartisan legislation with Sen. Ron Wyden, D-Ore., that would provide catastrophic coverage for uninsured Americans, agreed it was high time to find a "rational way in which to provide medicine in this country."

The owner of a frozen food company, Smith indicated he knew firsthand how difficult it was for a small business to provide adequate health care to its employees.

"In short, we're asking so much of our small businesses and workers today, we simply must address this in Congress today," Smith said.

Failure to find a viable solution could result in an increase in the number of the uninsured and a slowing down of the economy, Smith added.

According to the report, New Mexico, West Virginia, Oklahoma, Montana, Texas, and Arkansas will see family insurance premiums increase by at least $1,500 in 2005.

The study found that the number of uninsured would increase from approximately 48 million in 2005 to about 53 million in 2010, with California projected to top the list in terms of actual numbers. New Mexico, meanwhile, was projected to have the highest percentage of uninsured in 2010, according to the report.

Democratic Kansas Gov. Kathleen Sebelius, a former insurance commissioner, urged business owners to become involved in the dialogue about health insurance issues on both the state and federal levels.

Linking bankruptcy and health matters, Sebelius said she knew of many small-business owners and farmers who were living in fear of high health care costs.

A separate study by The Commonwealth Fund found that American employers spend an estimated $31 billion to cover the health care costs of workers employed elsewhere.

The private foundation found that of the 35.9 million workers who do not have health insurance from their own employers, about 16 million are covered by others through dependent coverage.

While another 3.7 million are covered by public programs, the foundation said 3.2 million are privately insured and 13 million are uninsured.

Speaking on the Senate floor early Wednesday afternoon, Sen. Edward M. Kennedy, D-Mass., referenced the Families USA report while commenting on the pending confirmation vote on Janice Rogers Brown, President Bush's pick to serve as judge on the U.S. Court of Appeals for the District of Columbia Circuit.

"Don't we think that's a national problem? Don't you think that's something we should be discussing in the United States Senate?" Kennedy asked his colleagues after mentioning that health insurance would continue to go up as more Americans lost their health insurance.

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