Californians have seen health care premiums increase by more
than 45 percent since 1999
– more than four times the rate of inflation.
Californians have seen health care premiums increase by more than 45 percent since 1999 – more than four times the rate of inflation.
According to a new survey by the Kaiser Family Foundation, two things are occurring as a result of the steep rise in premiums:
California businesses are a losing a competitive cost advantage as rates – which during the 1990s were well below most other states – approach the national average.
Workers are paying an increasing share of costs. Two-thirds of the companies surveyed required employees to pay more for health benefits last year.
There are several reasons for the rapid rise, including higher drug costs and legislation that has mandated insurers to provide certain services. But probably the greatest factor was that in the 1990s, health maintenance organizations kept rates low in order to compete for market share. But low rates meant that doctors, hospitals and other health care providers didn’t get raises either.
As a result, many doctors left California, nurses pursued other professions, and hospitals began operating in the red. Patients complained about losing longtime doctors, not being able to find specialists and driving farther for services.
For these reasons, it was important that premiums be increased to reflect the cost of providing care.
But employers and workers won’t be able to sustain such rapid rate increases for much longer.
Some businesses will look around, and determine that health insurance rates in combination with other high costs of operation, no longer make it worthwhile to stay in California. Others will either drop coverage or pass more costs along to workers. And workers, seeing paychecks get smaller as a result of increased premiums, will fight new cost shifts.
Three years ago, low rates were damaging the people that provide health care; today high rates are damaging those that pay for care. Unfortunately, unless Congress make changes in the way health care is financed, the future promises more of the same.
