Health Insurance: US Paying More for Less, Report Finds

Health insurance premiums have shot up more than 60 percent in the last eight years, and if they keep up at this pace the average family of four will be paying $25,000 a year just for health insurance, according to a report released Wednesday.

At the same time, deductibles are also going up for employer-sponsored plans, so workers are paying more and more for less and less, the non-profit Commonwealth Fund said.

"Workers are paying more for less financial protection when they get sick," said Commonwealth Fund senior vice president Cathy Schoen, who led the team writing the report.

Currently, according to the Kaiser Family Foundation, an average worker with employer-sponsored health insurance pays between about $15,000 to $16,000 a year for that coverage. Workers at bigger firms pay more. Coverage is about $5,600 a year for a single person.

The Commonwealth Fund, a private foundation that conducts health policy reform research, did a state-by state look at health insurance premiums and deductibles and used Census Bureau data on earnings for the report, which covers 2003 to 2011.

"Premiums for family coverage increased 62 percent across states -- rising far faster than income for middle- and low-income families," the report says. "At the same time, deductibles more than doubled in large and small firms. Workers are thus paying more but getting less-protective benefits. If trends continue at their historical rate, the average premium for family coverage will reach nearly $25,000 by 2020."

One big reason for the rising premiums? Rising expenses. "Broad evidence of poorly coordinated care, duplicative services, and administrative waste, as well as rising prices charged to those privately insured, signal that greater efforts are needed to slow cost growth in both private and public insurance markets," the report finds.

This isn't controversial. Earlier this year the independent Institute of Medicine made a formal pronouncement on what think-tanks and academic institutions had been saying for years. It said the U.S. health care system wasted $750 billion in 2009, about 30 percent of all health spending, on unnecessary services, excessive administrative costs, fraud, and other problems.

"The U.S. health insurance system remains highly fragmented, marked by elevated spending on administration and an inability or unwillingness to combat high health care costs in private insurance markets. Our system includes Medicare coverage for those 65 and older and some disabled individuals, state-operated Medicaid programs, and an array of competing private insurance plans," the report adds.

The Commonwealth Fund has been a big fan of the Affordiable Care Act, the 2010 health reform law known widely by supporters and opponents alike as Obamacare. And the report says the legislation will do a lot to lower costs, but not enough.

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