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Health Premiums Shifting

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San Jose Mercury News

Rapidly rising premiums are shifting the burden of health insurance
for California’s children from employers to taxpayers, according to
a study released Thursday.

If premiums continue to rise at a double-digit pace, employers will
cut back coverage for dependents to the point where less than half
the state’s children will be covered by an employer-sponsored plan
by 2010, the study predicted.

Employer cutbacks leave many working parents with two choices: turn
to government-funded insurance programs such as Medi-Cal or take the
risk of living without insurance, and seek care at emergency rooms
at public hospitals. Either way, taxpayers will pick up the mounting
tab.

The trend marks a dramatic shift for a health care system that has
relied for decades on employers to provide coverage for most Americans,
with government-funded programs providing a safety net for the poor
and elderly. It also would strain a public health care system that
in recent years has protected an ever-greater portion of the state’s
children.

“Health care costs are like a hot potato,” said Sarah Muller, co-author
of the study and associate policy director at Working Partnerships.
“As soon as you get it, you’re trying to throw it away to the next
person. . . . The inevitable thing is, more and more people wind up
uninsured, and the hot potato winds up being in the emergency room.”

The research was conducted by the non-partisan Center for Labor Research
and Education at the University of California-Berkeley and Working
Partnerships USA, a San Jose-based coalition of labor unions, religious
groups, educators and community organizations. It was funded by the
California Endowment.

The annual cost of medical coverage has vaulted 9.2 percent over the
past year, following four years of double-digit increases, the Kaiser
Family Foundation reported last week. That pushed the average premium
for a family of four past $10,000.

Just 60 percent of companies provided insurance in 2005, down from
69 percent in 2000.

In addition, companies are handing workers an increasing share of
the bill. With the employee’s portion of the premium for family coverage
swelling to more than $2,700, many workers are passing up the offered
coverage.

If premiums rise 10 percent annually through 2010, just 49 percent
of California’s children will be insured through an employer’s plan,
the study said.

Nearly one-third will rely on government-funded health programs such
as Medi-Cal and the Healthy Families program. Another 14 percent of
California’s children will go without insurance altogether because
their families can’t qualify for government-funded programs and can’t
afford to buy coverage on their own.

That means 470,000 more children will be enrolled in a public program,
and 280,000 more will be uninsured in 2010.

Last month, the same groups issued a report predicting that the shrinking
availability of employer-sponsored health coverage would hit adults
even harder than children because the public safety net is weaker
for adults. The percentage of adults going uninsured is expected to
climb to nearly 29 percent in 2010, up from 24 percent in 2000.

The Santa Clara Family Health Plan is symbolic of the improvements
in the safety net for children. Founded in 2001 and funded largely
by tobacco taxes and tobacco-industry legal settlements and local
taxes, it has become a national model by providing full medical, dental
and vision coverage for 14,000 children of working parents in the
county. Parents pay monthly premiums as low as $4 a child.

At the program’s current level of funding, it would either have to
limit who is eligible or add kids to a waiting list that already is
700 names long, said Chief Executive Officer Leona Butler.

That underscores the difficult questions dogging policy-makers, said
study co-author Muller. “The big policy issues are, how do you prevent
the continued erosion of employer-based coverage? And how do you provide
an insurance package that is affordable to everyone involved — affordable
to the company, affordable to the family and even affordable to the
government?”

“Public coverage programs are serving as a huge safety net for children,”
Muller said. “But if we do nothing, the number of uninsured children
will increase.”