Health insurance costs for New Yorkers who get coverage through their employers have risen sharply over the past decade -- with average out-of-pocket expenses alone rising more than 100 percent between 2002 and 2012, on average.
The increases come as personal income in the New York metropolitan area actually fell 6.9 percent during the same period, government statistics show.
About 49 percent of New Yorkers with health insurance still get it through their jobs, according to the state Department of Financial Services. And many, mirroring a national trend, are paying more, as their employers, faced with the rising costs of premiums -- driven by the burgeoning costs of health care -- have passed on the increases.
The increases came before last year's rollout of the federal Affordable Care Act and the state exchanges, which were designed to offer coverage to those without job-based insurance and to lower insurance costs.
From 2002 to 2012 -- the latest year available and after adjusting for inflation -- the average cost of premiums for a family in New York rose 53 percent, while the employee's contribution rose 78 percent, according to data from the federal Agency for Healthcare Research and Quality.
In 2012, the average premium for a family in the state was $16,924; of that employees, on average, had to pay $4,289, or more than a quarter.
Out-of-pocket costs for workers rose even more. In 2002, less than 39 percent of New Yorkers with job-based health plans had to pay deductibles; a decade later that percentage had risen to 58 percent, according to the federal data. After adjusting for inflation, the average deductible for individuals jumped 104 percent from 2002 to 2012; for a family, it increased 80 percent.
The average deductible in 2012 in New York for an individual was $950 and $2,060 for a family. Meanwhile, employees' incomes overall have not risen. In the metropolitan region, including Long Island, the median income in 2008, adjusted for inflation, was $68,691; in 2012 it was $63,982 -- a 6.9 percent decrease, according to the U.S. Census Bureau.
"Millions of people are being squeezed in a vise," said Jack Meyer, a health economist and an author of a paper "Healthcare Costs and Spending in New York State" published in February by the nonprofit New York State Health Foundation. "They're getting very modest pay increases while employers' premiums are going up . . . In effect, workers have a hand going in their lunch box and taking an apple out before it is even opened."
The increases have had real economic impact. The health foundation report found that in response to rising insurance costs, 25 percent of employers reduced or froze wages, 22 percent avoided hiring more workers and 20 percent reduced benefits. Some employers have opted not to offer insurance: while 49 percent of employers now offer coverage, in 2001, 69 percent did, the report said.
Alan Murray, chief executive of North Shore-LIJ CareConnect, the health system's new insurance company, said insurance costs are determined by complex factors, including how successful the insurer is in negotiating with doctors and hospitals for services, how often services are used, how much new and often expensive technology is used and an aging and sicker population.
A Commonwealth Fund, a nonprofit that studies health care issues, report published in 2012 that looked at trends in eroding benefits and rising insurance costs in each state found that while premiums are rising more slowly than they were before the federal Affordable Care Act, "private insurance spending per person is projected to continue to grow more rapidly than incomes over the next decade."
While the ACA -- including expansion of insurance market rules, some consumer protections and the insurance exchanges -- is supposed to help curb rising health insurance premiums, some are not so sure.
Leslie Moran, a spokeswoman for the New York Health Plan Association, the trade group for health insurers in the state, said the ACA isn't lowering insurance costs, it has increased them.
For the next three years until it is phased out, almost every health insurance plan enrollee will pay a "reinsurance tax" -- $63 this year. The tax goes into a fund to help insurers cover high-cost cases, thereby ensuring that they would participate in the individual market. And she said expansion of mental health coverage under the ACA will also boost insurance costs.
But Sara Collins, vice president and an author of the Commonwealth Fund report, said the growth in premiums has slowed nationally somewhat "and some of that is driven by the ACA."
A recent nonpartisan Congressional Budget Office report projected that insurance coverage provisions would actually cost the federal government $109 billion less than it had previously forecast. That's in part, the CBO said, because it expected premiums on the exchanges to go up nominally in 2015, and in 2016 to be 15 percent cheaper than it has previously forecast.
Nevertheless, the CBO said, "rising health care costs per person will continue to be the primary factor raising health insurance premiums over the next decade."
Broken delivery system
That, Collins said, is in good part, not because of the ACA, but because of "a fragmented health delivery system with wide-ranging prices for very similar services" charged by doctors and hospitals.
New York is second only to California in health care spending, with an annual 5.5 percent increase per person from 1991 to 2009, according to the health care research nonprofit Kaiser Family Foundation.
Employees are feeling the pinch, even as they say that health care remains a top priority.
Mercer, a global human resources consulting firm, in February released a national workplace survey of 1,506 participants. Forty-nine percent "strongly agreed" that receiving health benefits through work is as important as getting a salary. Another 44 percent "somewhat agreed." And 73 percent said their company should offer better benefits. On the other hand, 66 percent said they would rather pay higher out-of-pocket costs than see their health benefits reduced.
Insurance broker Karl Washwick's experience is common.
A decade ago, the owner of Washwick Agency in Riverhead said he paid "$200 a month and change" for his company's health insurance premium and out-of-pocket costs were less than $2,000 a year. Over the years, to combat increases, he switched to a high-deductible plan for himself and his seven employees.
He now pays a monthly premium of $379.08. The deductible is $5,000 for a single person -- meaning the employee has to pay that amount in medical bills before any insurance kicks in -- for which the company reimburses anywhere from zero to 100 percent depending on length of service.
In September, when he renews the plan, the premium for the same plan will jump 24.5 percent and the deductible will go up 27 percent, he said.
In the meantime, he said, his profits are down.
Washwick attributes the increases in health care costs to the fact that people are "doctor-conscious rather than health-conscious. There's no personal responsibility," he said.
Kevin Quinn, a partner in Chernoff Diamond & Co., a benefits and risk management consulting firm in Uniondale, said many companies face a dilemma. "It's like a balloon. You squeeze it out of one area and it goes up in another," he said. "Most employers want to offer a reasonable benefit program but they also have to be fiscally responsible. It's a delicate balancing act."
Neil Weingarten, vice president of Conference Associates in Patchogue, group insurance administrators, agreed. The increase in cost-sharing -- as it is termed -- is the "continuation of a trend going on for some time" to offset the increases in premiums, he said.
"The idea is that as premiums go up, the only way to reduce the premium is to reduce benefits and you don't want to reduce benefits, so you put together a plan so that the employee shares some of the cost in the earlier part of the year," he said.
Ed Smith, chief financial officer for Overseas Military Sales Corp. in Woodbury, which distributes personal use vehicles to the military overseas, said providing competitive health benefits to the company's 185 employees is among its top three concerns.
The company has contributed 65 percent toward employee health costs but, he said, that has become harder as premiums for his company have risen 10 to 12 percent a year.
The company now offers what he called a "low plan" with fewer benefits and requires higher out-of-pocket expenses for which the company still pays 65 percent. Those willing to pay higher premiums can get a better plan with lower out-of-pocket costs for which the company pays about 50 percent, he said.
"If you want to keep it to an amount you can live with, you have to dilute the benefits," Smith said. "How much does the company absorb and how much the employee?"So far, he said he believes the company has managed to find the right balance. "By and large, it hasn't affected our morale," Smith said. Asked if the issue was a headache, he said, "I would say -- constant."