Health costs rising at fast clip

  • Article by: MAURA LERNER , Star Tribune
  • Updated: October 4, 2007 - 10:15 PM

In Minnesota, premiums for private health insurance jumped 7.6% last year, a study found. And out-of-pocket costs were up 15%.

Minnesotans who have private health insurance saw their premiums rise 7.6 percent last year, according to a report by the Minnesota Department of Health.

At the same time, they faced a 15 percent jump in out-of-pocket expenses, as employers continued to shift health costs back to employees, the report found.

Released Thursday, the report said that individuals paid an average of $562 in deductibles and copayments in 2006, up from $489 the year before.

"I think everybody's seen their copays increase," said Julie Brunner, executive director of the Minnesota Council of Health Plans. But she said that it's part of an effort by employers to keep insurance affordable so that they can continue to cover their employees.

Julie Sonier, the author of the report, called it "a continuation of a trend that we've seen over the past several years." Since 2000, the average out-of-pocket costs have risen by 12 to 34 percent a year, said Sonier, who is director of the health economics program at the state Department of Health.

Scott Leitz, an assistant health commissioner, called the report "yet another indication that serious attention to containing health care costs is needed," adding that costs are growing "at an unsustainable rate."

The result, he said, could be "that more and more people may become unable to afford health insurance coverage."

The report also found that:

•Out-of-pocket costs accounted for 14 percent of health care spending in 2006, compared with 10.1 percent in 2000.

•Per person, spending on health care by private insurers in 2006 rose two to three times faster than wages, and 5.5 times the rate of inflation.

•Last year's jump in health premiums, 7.6 percent, was significantly higher than the year before, when premiums rose 4.5 percent.

•Minnesota health insurers barely broke even, according to Sonier, as their costs rose 8.9 percent, up from 7.2 percent in 2005.

Sonier's report said that hospital and physician services accounted for the largest increases in spending, while drug costs leveled off.

"The trends here are consistent with what's going on nationally," said Brunner, of the council of health plans. She said that demand for health care is rising, with an aging population and more chronic illnesses. "People in this country use a lot of health care. We're not out of line with what's going on around the country."

Bruce Rueben, president of the Minnesota Hospital Association, said that no one group can be blamed for rising costs. "I'm not aware of any hospitals that got a 7 percent increase in their contracts from private insurers," he said.

At the same time, he said, "we don't need another report to tell us that health care costs and the growth in spending on hospitals and other services are a problem that's screaming to be addressed."

Maura Lerner • 612-673-7384

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