More NC firms drop health insurance for workers as costs soar

aalexander@charlotteobserver.com, relder@newsobserver.comApril 11, 2013 

  • Other key findings • From 2000 to 2011, the percentage of N.C. employers offering health insurance coverage dropped to 50 percent – a decline of 9.5 percentage points. • In 2000, the percentage of North Carolinians with employer-sponsored insurance was virtually identical to the nation’s. But by 2011, the N.C. figure was 3.5 percentage points lower than the nation’s – and below all but 11 other states. • Lower-income residents suffered some of the biggest declines. Among N.C. residents earning less than twice the poverty level, the number with employer-sponsored insurance dropped by 12.5 percentage points – to 27 percent. • Nationally, the share of people with employer-sponsored insurance dropped about 10 percentage points – to 59.5 percent.

    Source: Robert Wood Johnson Foundation report

— A new study suggests rising health care costs have taken a particularly large toll in North Carolina, where the number of residents who receive health insurance through their employers has dropped sharply over the past decade.

The portion of North Carolinians under age 65 with employer-sponsored insurance declined from 69 percent in 2000 to 56 percent in 2011, according to the report released Thursday by the Robert Wood Johnson Foundation.

That change left 220,000 fewer residents with health insurance. Only four states had a larger percentage drop.

Soaring health care costs and insurance premiums are largely to blame, experts say. In North Carolina, the average annual premium for family coverage more than doubled over the 11-year study period, rising to $13,974.

Most companies require employees to pay part of their insurance premiums, but many insurers require the employer to cover at least half the cost.

“Employers have to decide every year, ‘Can I afford this (health insurance)?’ ” said Lynn Blewett, director of the State Health Access Data Assistance Center, which conducted the study. “And a number of small and midsized employers are saying, ‘No, I can’t.’ ”

Adam Linker, an analyst at the N.C. Health Access Coalition, said the trend hurts the state’s residents as well as its economy.

“We know people without insurance are sicker than people with insurance, and they die sooner,” Linker said. “This is not only a tragedy for the people involved, but for our productivity. … It’s really hurting the state as a whole.”

Jackie Christie, 52, works more than 35 hours each week at a Raleigh restaurant that does not offer health care insurance to non-managers.

Laid off from a previous job that offered insurance, Christie spent 18 months looking for work before taking her current position two years ago.

“Jobs that offer insurance are just harder to come by than they were a few years ago,” said Christie, a server.

Christie was glad she was covered by her employer’s health care plan when she was diagnosed with breast cancer and underwent radiation, chemotherapy and surgery in 2006.

She now gets medical assistance from Open Door, a clinic operated by the nonprofit Urban Ministries of Wake County.

How much does that cost?

Part of the problem is the spiraling cost of hospital care. A report published last month in the American Journal of Managed Care found that inpatient hospital prices nationwide increased 8.2 percent per year from 2008 to 2010 – far faster than inflation.

An investigation last year by The News & Observer and The Charlotte Observer found that urban hospitals were piling up large profits, often inflating prices on drugs and procedures as much as 10 times over cost. The investigation found that hospital consolidations and the acquisition of physician practices enables them to negotiate higher payments from insurance companies.

The recession also played a major role in reducing access to employer-sponsored insurance. Throughout the downturn, North Carolina suffered one of the nation’s highest unemployment rates, still at 9.4 percent as of February.

Senate President Pro Tem Phil Berger said North Carolinians have reason to be troubled by the report’s findings.

“Those who have health coverage sense that coverage is at risk,” Berger said. “This survey shows they have good reason for that concern.”

Berger said that while he doesn’t believe North Carolina lawmakers can stop the trend, they may be able to help by passing a recently introduced Senate bill that he says would push hospitals to be more cost effective. The bill would require hospitals to publicly disclose their prices on their most common medical procedures.

Small firms hit hard

David Crump, a Raleigh-area employee benefits consultant, said some smaller employers are deciding to drop or not offer health insurance to employees.

“If you are a Fortune 500 company, you may be able to afford it, but small employers are having a difficult time, especially those whose workers are in blue-collar positions,” Crump said.

“It’s hard to justify paying $14,000 a year for family coverage if you are only paying a $20,000 salary.”

Some large companies are cutting back on coverage as well.

Wal-Mart, the nation’s largest private employer, announced in 2011 that future employees who work less than 24 hours a week would no longer be eligible for company health insurance. And starting this year, the company isn’t offering insurance to newly hired employees who work fewer than 30 hours a week, according to The Huffington Post.

Even employees who have insurance available through work are less likely to buy it because of its high cost. The Robert Wood Johnson report found that 21 percent of workers offered insurance declined it in 2011, compared to 17 percent in 2000.

Linda Barnes-Cheatham, 58, of Raleigh is a home health aide who says that although her employer offers coverage, the premiums are higher than she can afford.

“I don’t make that much money,” Barnes-Cheatham said.

Living with asthma and liver disease means that she sometimes puts off seeking medical help from her physician at Alliance Medical Ministry, a nonprofit that charges a small fee for service.

“I walk around sometimes and be sick for a while before I attempt to go to the doctor,” Barnes-Cheatham said.

The coming reform

Pam Silberman, president of the N.C. Institute of Medicine, a health care policy advising group, says rising premiums have created a dilemma for many employers.

“For some it’s been a choice between continuing in business or not having as many employees and offering health insurance,” Silberman said. Although Medicare and Medicaid enrollment expanded over the study period, the ranks of the uninsured still grew, rising from about 15 percent to 18 percent nationally, according to the state health data center. In North Carolina, about 1.5 million people – roughly 19 percent of the population – were uninsured in 2011, according to the Institute of Medicine.

The federal Affordable Care Act may change the landscape. Starting next year, anyone earning up to 400 percent of the federal poverty level – $94,200 for a family of four – will be eligible for subsidies to help purchase health insurance.

Under the ACA, businesses with more than 50 employees will be required to offer health insurance to workers or pay a penalty. There are no consequences for smaller employers who decline to offer insurance. But the health reform act already provides tax credits for small businesses offering insurance to workers.

Turning down Medicaid

North Carolina’s decision not to expand Medicaid eligibility as proposed by the ACA will likely mean that health care access will remain a struggle for many lower-income residents, advocates say.

The General Assembly turned down the option to extend coverage to more poor adults, citing concerns over the long-term cost. Currently, Medicaid covers only children under 18, and a small segment of very poor adults with disabilities or other special conditions.

Had the state opted into the Medicaid expansion, all adults making less than 138 percent of the federal poverty level – or $31,809 for a family of four – would qualify, with the federal government picking up most of the tab.

For now, the erosion of employer-sponsored insurance leaves some experts worried.

“A lot of people without coverage don’t get care until they absolutely need it,” Blewett said.

Elder: 919-829-4528

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