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Like most Americans, Arkansans face an increasingly difficult struggle to afford access to high-quality health care. Families across the state too frequently face the choice between buying groceries and gasoline or paying ever-increasing health insurance premiums.
For most small businesses, the high costs and complexity of plans have limited their ability to offer employer-sponsored health insurance. The result is a financial 'Russian roulette,' with families forgoing health insurance coverage and hoping to avoid the financial catastrophe that a serious illness could cause.
When people face financial barriers to getting care, they often either forgo preventive screenings or wait until a condition is advanced before seeking care, resulting in the need for more costly and less effective treatments. For those who suffer major illnesses, like cancer or a heart attack, and lack insurance, their subsequent hospital bills are a major cause of personal bankruptcy. The cost of their care, however, is real and is reflected in the destabilization of our health care system.
Today, health care expenditures represent about 17 percent of the U.S. gross domestic product. The amount spent on health care has grown faster than wages or inflation for the past two decades. As the cost of health care increases, the issue of affordable access to quality health care becomes everyone's problem in one way or another.
Premium increases have a direct effect on most people who are insured through their employers. In 2003, the cost of insurance premiums rose more than 13 percent while overall inflation and workers' earnings rose less than 4 percent. As premiums increase, some employers cannot afford to offer health insurance. Recently, to maintain their ability to offer coverage, employers have begun shifting more and more of those costs to the employee through higher deductibles and co-payments.
Unfortunately, for the past decade, the number of uninsured has increased as high premium prices have caused individuals and families to opt out of coverage or employers to drop their plans. According to the U.S. Census Bureau's Current Population Survey; about 520,000 of Arkansas' 2.7 million citizens went without health insurance last year.
This lack of coverage increases the burden on public assistance and safety-net providers like the Arkansas Health Education Centers and Community Health Centers. It also puts increased pressure on hospitals and health care providers as they struggle with the cost of uncompensated care generated by those unable to pay. These very real costs must be shifted somewhere--either to the provider who takes a financial loss or to collection departments that go after families who can't pay, or they are absorbed into the costs paid by those who do have insurance.
Choices Matter
Costs of care can, however, be influenced by individual choices. Using de-identified data from the state's largest insured employer group--state and public school employees--the Arkansas Center for Health Improvement examined medical claims for individuals with health risk behaviors including tobacco use, obesity and physical inactivity compared with individuals in the plan who did not have these risks.
The study showed the average medical cost for each individual with any of the three risk factors was $1,045 per year higher than for those without any of the risk factors. More importantly, the costs associated with these risk factors dramatically increased with age. These risk factors are also known to be associated with conditions that are major cost-drivers and are a root cause of the rise in health insurance premiums, such as heart disease and diabetes.
Our national debate about health care solutions is meaningless unless we find affordable solutions that not only care for people when they're sick but engage people and reward those who work to stay healthy.
As health care finance solutions are sought in Arkansas and across the country, there is one thing everyone can do: Invest in your health. I challenge you to consider investing in health--your individual health, that of your family and that of your employees--by getting active, achieving or maintaining a healthy weight, or quitting smoking.
Deciding to invest in the most functional system ever developed--your body--is similar to business decisions you make every day. Through this health investment, future returns will be more valuable than other decisions you will make today--both through better health and through lower insurance costs. Let's get up and get going!
Dr. Joseph W. Thompson, surgeon general of the state of Arkansas, holds a master's degree in public health. He also is the director of the Arkansas Center for Health Improvement, a nonpartisan, independent health policy center dedicated to improving the health of Arkansans. It is jointly supported by the University of Arkansas for Medical Sciences, the Arkansas Department of Human Services and Arkansas Blue Cross & Blue Shield.
Changing Cost Allocations Arkansas Annual Family Premiums Total, Company and Employee Contributions Annual Premiums ($) Year Company Employee 2001 $7,288 74.5% 25.5% 2004 $8,383 71.2% 28.8% 2005 $9,490 72.5% 27.5% Note: Table made from bar graph. Exhibit 1: Increases in Health Insurance Premiums Compared to Other Indicators, 1988-2007 Health Insurance Workers' Overall Premiums Earnings Inflation '88 12.0% '89 18.0% '90 14.0% '91 '92 '93 8.5% '94 '95 '96 0.8% '97 '98 '99 5.3% '00 8.2% '01 10.9% '02 12.9% '03 13.9% '04 11.2% '05 9.2% '06 7.7% '07 6.1% 3.7% 2.6% * Estimate is statistically different from estimate for the previous year shown (p<.05). No statistical tests are conducted for years prior to 1999. Note: Data on premium increases reflect the cost of health insurance premiums for a family of four. The average premium increase is weighted by covered workers. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits. 1999-2007; KPMG Survey of Employer-Sponsored Health Benefits, 1993, 1996; The Health Insurance Association of America (HIAA), 1988, 1989, 1990; Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April). 1988-2007; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey. 1988-2007 (April to April). Reprinted from the 'Employer Health Benefits 2007 Annual Survey'' with permission from the Henry J. Kaiser Family Foundation. Note: Table made from line graph. Average Annual Total Cost by Risk Factor C = Daily. cigarette user P = Physically inactive O = Obese No Risk $2,382 Cigarette Use $2,690 C+P $3,257 C+O+P $4,432 C+O $3,529 Physical Inactivity $3,169 O+P $4,158 Obese $3,441 N = 43 461 56% response Note: Table made from pie chart.
