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Friday, December 07, 2018 1:00 am

Out-of-pocket health costs jump in Indiana

Growth in employee portion of coverage bill outpaces nation

BRIAN FRANCISCO | The Journal Gazette

Workers' out-of-pocket costs for employer-provided health insurance jumped 13.5 percent in Indiana last year, twice the nationwide increase, The Commonwealth Fund reported Thursday.

Hoosier workers on average faced paying $7,462 in premiums and potential deductibles last year, an increase of $888 from the previous year. Nationally, out-of-pocket expenses averaged a potential $7,240 last year.

The nonprofit Commonwealth Fund, which advocates for a high-performing health care system, said in its study of employer insurance plans that premiums “rose sharply in nearly every state in 2017” and that deductibles went up in 35 states and the District of Columbia.

Commonwealth Fund officials blamed spiraling health care prices for the rising insurance expenses.

“The prices of care in the United States are way out of proportion to the prices of care anywhere else. ... And this reflects the negotiating power of providers,” David Blumenthal, president of the New York-based Commonwealth Fund, said during a conference call with news media.

Blumenthal, a former professor at Harvard Medical School, said health care providers “are consolidating into larger and larger health systems that have more and more dominance in their local markets. So there are very fundamental distortions in the market for health care that make it possible for prices to be raised by the suppliers of the service in ways that are not true in other markets where there is more competition and more balance in negotiating power between the purchasers and suppliers of service.”

The Fort Wayne area has been dominated by the Parkview and Lutheran hospital systems, which have acquired many physician practices in recent years. Indiana University Health joined the market last summer and plans to expand its presence.

“We can expect that people will start significantly changing their health care behavior because of the ever-higher deductible levels and the fact that median incomes aren't really keeping pace,” said Sara Collins, lead author of the study by The Commonwealth Fund. She did not elaborate.

The organization reported that out-of-pocket employee insurance costs ate up 11.7 percent of the U.S. median income and 11.5 percent of the Indiana median income in 2017. In 2008, out-of-pocket expenses consumed 8 percent of Americans' median income and 6 percent of Hoosiers' income, it said.

The Commonwealth Fund said 56 percent of Americans younger than 65, or about 152 million people, have their medical insurance through an employer.

Low unemployment should force employers to increase compensation to attract workers, Blumenthal said, “and that may lead to a more generous insurance package going forward.”

The Commonwealth Fund issued policy suggestions for containing insurance expenses, including expanded access to family-plan tax credits offered through the Affordable Care Act, tax credits for out-of-pocket costs, the exclusion of more medical services from plan deductibles and an increase in the required minimum value of employer plans.

Individual patients are “way down at the bottom” of the health care chain and have no voice in prices, said Douglas Powers, an employee benefits compliance attorney for local law firm Beckman Lawson. Powers said in a telephone interview that changing the bargaining balance might require the emergence of a single-payer health care system.

Ryan Stoneburner, owner of the Fort Wayne insurance brokerage Health Insurance Inc., said the federal government contributed to 2017's rise in insurance prices by increasing dependent premiums for small-employer group plans offered through the Affordable Care Act.

“It certainly adds fuel to the fire,” he said in a phone interview.

Stoneburner noted that Indiana's low rankings in national health assessments have “a direct correlation to health care costs.” But he added: “It doesn't really explain the spike in '17. People didn't start getting bad habits over the course of one year.”

Indiana did see a 3.7 percent decrease in employee deductible costs for workers with single insurance coverage, to $1,797, according to The Commonwealth Fund. But employee contributions to premiums for single coverage soared by 13.3 percent, to $1,460.

Combined, employee contributions for single and family coverage premiums grew on average by 10.7 percent, and employee deductible costs grew on average by 16.7 percent. Both rates far exceeded the national growth rates for out-of-pocket costs.

The Commonwealth Fund said its report used data from the federal Medical Expenditure Panel Survey-Insurance Component, which polled more than 26,000 employers.

bfrancisco@jg.net