A new study suggests rising health care costs have taken a particularly large toll in North Carolina, where the number of residents who receive health insurance through their employers has dropped sharply over the past decade.
The proportion of nonelderly North Carolinians with employer-sponsored insurance declined from 69 percent in 2000 to 56 percent in 2011, according to the report released Thursday by the Robert Wood Johnson Foundation.
That change left 220,000 fewer residents with health insurance. Only four states had a larger percentage drop.
Soaring health care costs and insurance premiums are largely to blame, experts say. In North Carolina, the average annual premium for family coverage more than doubled over the 11-year study period, rising to $13,974.
Most companies require employees to pay a portion of their insurance premiums, but many insurers require the employer to cover at least half the cost.
Employers have to decide every year, Can I afford this (health insurance)?, said Lynn Blewett, director of the State Health Access Data Assistance Center, which conducted the study. And a number of small- and midsized employers are saying, No, I cant.
Adam Linker, an analyst at the N.C. Health Access Coalition, said the trend hurts the states citizens as well as its economy.
We know people without insurance are sicker than people with insurance and they die sooner, Linker said. This is not only a tragedy for the people involved, but for our productivity. Its really hurting the state as a whole.
A tough change
Jackie Christie, 52, works more than 35 hours each week at a Raleigh restaurant that does not offer health care insurance to nonmanagement employees.
Laid off from a previous job that did offer insurance, Christie spent 18 months looking for work before taking her current position two years ago.
Jobs that offer insurance are just harder to come by than they were a few years ago, said Christie, a server.
In 2006, Christie was diagnosed with breast cancer and underwent radiation, chemotherapy and surgery.
She now gets medical assistance from Open Door, a clinic operated by the nonprofit Urban Ministries.
The spiraling cost of hospital care has contributed to the trend. A report published last month in the American Journal of Managed Care found that inpatient hospital prices nationwide increased 8.2 percent per year from 2008 to 2010 far faster than inflation.
An investigation last year by the Observer and The News & Observer of Raleigh found that urban hospitals are piling up large profits, often inflating prices on drugs and procedures many times over cost. Hospital consolidation has contributed to rising prices. The investigation found that as hospitals merge and buy physician practices, theyre able to negotiate higher payments from insurance companies.
The economic slump also played a major role in reducing employer-sponsored insurance coverage. Throughout the downturn, North Carolina suffered one of the nations highest unemployment rates.
Senate President Pro Tem Phil Berger said North Carolinians have reason to be troubled by the reports findings.
Those who have health coverage sense that coverage is at risk, the Eden Republican said. This survey shows they have good reason for that concern.
Berger said that while he doesnt believe North Carolina lawmakers can stop the trend, they may be able to help by passing a recently introduced Senate bill that he says would push hospitals to be more cost effective. The bill would require hospitals to publicly disclose their prices on their most common medical procedures.
North Carolina hospitals dont publicly post their prices. That makes it all but impossible for patients to comparison shop or to effectively question prices, the Observer and the News & Observer found. Experts say the system also helps hospitals make more money.
Small firms hit hard
Thomas Conroy, a small business consultant from Charlotte, says he has worked with a number of employers who have witnessed the changes firsthand.
Some of those small business owners used to work with large companies that offered health insurance. After those companies reduced their staffs, many of the laid-off workers started their own businesses but then found that insurance was unaffordable.
Theyre just saying its too expensive for us even to consider, Conroy said.
David Crump, a Raleigh-area employee benefits consultant, said some smaller employers are deciding to drop or not offer health insurance to employees.
If you are a Fortune 500 company you may be able to afford it, but small employers are having a difficult time, especially those whose workers are in blue collar positions, Crump said.
Its hard to justify paying $14,000 a year for family coverage if you are only paying a $20,000 salary.
Some large companies are cutting back on coverage as well.
Wal-Mart, the nations largest private employer, announced in 2011 that future employees who work less than 24 hours a week would no longer be eligible for company health insurance.
And starting this year, Wal-Mart will not offer insurance to newly hired employees who work fewer than 30 hours a week, according to The Huffington Post.
The coming reform
Pam Silberman, president of the N.C. Institute of Medicine, a health care policy advising group, says rising health premiums have created a dilemma for many employers.
For some its been a choice between continuing in business or not having as many employees and offering health insurance, she said.
Although Medicare and Medicaid enrollment expanded over the study period, the ranks of the uninsured still grew, rising from about 15 percent to 18 percent nationally, according to the state health data center. In North Carolina, about 1.5 million people roughly 19 percent of the population were uninsured in 2011, according to the Institute of Medicine.
The federal Affordable Care Act may change the landscape. Starting next year, anyone earning up to 400 percent of the federal poverty level $94,200 for a family of four will be eligible for subsidies to help purchase health insurance.
Under the ACA, businesses with more than 50 employees will be required to offer health insurance to workers or pay a penalty.
There are no consequences for smaller employers who decline to offer insurance. But the health reform act provides tax credits for small businesses offering insurance to workers.
Turning down Medicaid
North Carolinas decision not to expand Medicaid eligibility as proposed by the ACA will likely mean that health care remains unaffordable for many lower-income residents, advocates say.
The General Assembly turned down the option to extend coverage to poor adults, citing concerns over the long-term cost. Currently, Medicaid only covers children under 18, and a small segment of very poor adults.
Had the state opted into the Medicaid expansion, adults making less than 138 percent of the federal poverty level or $31,809 for a family of four would qualify, with the federal government picking up most of the tab.
For now, the erosion of employer-sponsored insurance leaves some experts worried.
A lot of people without coverage dont get care until they absolutely need it, Blewett said.
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