The NewStandard ceased publishing on April 27, 2007.

Health Insurance Crisis Worsens while Aetna Posts Profit

by Simone Baribeau

Health insurance premiums and the number of uninsured are on the rise. Major carrier Aetna has seen a rise in profits, but lack of insurance causes 18,000 deaths per year, and increased insurance costs have led to strikes.

May 1, 2004 – While fewer workers are able to afford health insurance because of increased premiums, health insurance company Aetna announced an 11 percent jump in first quarter net income.

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Commenting on the effect of increasing health costs on workers, Barbara Maynard, the spokesperson for United Food and Commercial Workers International Union said, "As corporations push these costs onto workers in the name of higher profits the less opportunities there will be for working families in America."

For the last five years, the cost of health insurance has been rising, leaving more people uninsured. Between 1999 and 2003, the cost of employer provided health benefits rose over 44 percent to $3,383 per year for individuals and $9,068 per year for families, according to numbers provided by the Kaiser Family Foundation.

Over half of low-wage workers went without employer provided health insurance for at least part of 2002, and the percent of all workers and their families with employer health coverage decreased steadily since 1999, according to a recent study by the Center for Economic and Policy Research (CEPR), a non-partisan economic think tank. The study also found that Latinos, children, and adults under 25 disproportionately lack health coverage, with 29 percent of children uninsured for at least part of 2002.

The effects of increased insurance rates have been devastating.

"As the employers look to pass on the increasing cost of health care to workers, it’s a net reduction in take home pay for those working families, which is a terrible burden to working families as they try to put food on the table and pay their rent and send their children to college," --Barbara Maynard, UFCW Spokesperson.

According to a recent study by the National Academies’ Institute of Medicine, 18,000 people die prematurely each year as a result of being uninsured. The National Academies’ Institute of Medicine is a private health research organization created by Congress. Their study found that uninsured individuals suffer from poorer health and development than their insured counterparts. It also said that entire communities suffer, since health facilities may move out of areas with low rates of insurance coverage.

The increase in health premiums has led to several recent strikes, most notably in Southern California where almost 70,000 grocery store workers struck for four and a half months, largely over their employers’ attempts to pass increased health insurance premiums on to them.

"As the employers look to pass on the increasing cost of health care to workers, it’s a net reduction in take home pay for those working families, which is a terrible burden to working families as they try to put food on the table and pay their rent and send their children to college," union spokeswoman Maynard said.

Margaret Birdlebough, a single mother of three, has never had employer-sponsored insurance. She now works independently, cleaning houses, but she worked for years as a waitress at small restaurants. "I have arthritis, but I haven’t been to my arthritis doctor in more than 2 years, because I don’t have insurance. I don’t take the arthritis medicine the way I’m supposed to because it’s $100 a prescription, and I can’t afford to. In the long run I’m doing more damage [by not taking it regularly], but I can’t afford to take it, so I don’t," she says. "That means having to curb my activities, not working some days when I should be working…I resent it, quite frankly."

Aetna admitted that the impact of increased health costs on businesses and consumers is worrisome in a December 2003 brief. "Health benefits companies can and must develop creative, new products and tools that will help employers slow rapidly rising health care costs while allowing consumers the choice and flexibility they expect from their health plans. Aetna HealthFund, for example, is an innovative health product that gives employers additional flexibility in customized product design and gives consumers greater choice and control in directing their health care dollars," the brief said.

In the last three years, Aetna has demonstrated its own flexibility and beefed up its profit margin by dropping unprofitable contracts-and thus dropping coverage-reports the Wall Street Journal. It has also increased its income by raising insurance premiums, and negotiating for lower costs. As a result the company insures 8 million fewer people.

Consumer advocacy groups have long contended that administrative costs caused by the US’s fragmented private system are largely to blame for rising insurance premiums.

A 2003 report by Public Citizen, a non-partisan consumer advocacy organization, cites figures from the New England Journal of Medicine, which show that in 1999, 31 percent of US health spending was on administrative costs. By comparison, comparable aspects of Canada’s single payer system amounted to only 16.7 percent of health spending. The report argues that the difference is due to inefficiencies in the US’s "current fragmented and duplicative payment structure." In Canada’s system the government pays all health providers.

CEPR recently released a paper which determined that, in 2000, the average cost of health care per person in the 21 countries with longer life expectancies than that of the US was $2,230, while the average per capita health care costs in the US amounted to $4,540 and the size of the gap is increasing rapidly. The paper states, "The power of interest groups opposed to any serious reform effort (e.g. the insurance industry and the pharmaceutical industry), dims the prospects for serious health care reform in the United States any time in the near future."

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The NewStandard ceased publishing on April 27, 2007.


Simone Baribeau is a contributing journalist.