Your Money and/or Your Life
At the nation's largest private employer, Wal-Mart Stores, only about half the roughly one million domestic employees are in a company health plan, said Mona Williams, a Wal-Mart vice president. Of the 500,000 others, half are ineligible because they were hired too recently; many depend on parents, a spouse or a government program for coverage, Ms. Williams said.

The figures for big companies reflect a broader shift in the American economy away from mechanisms that for decades have spread the burden of health care costs onto more shoulders.

Largely because of the booming cost of prescription drugs, for example, Medicare covers less of its beneficiaries' health care expenses than at any time since the program was established in 1965, according to Robert M. Hayes, president of the Medicare Rights Center, a patient advocacy group.

As a result, the elderly paid 22 percent of their average median income, or $3,757, for health care last year — a larger proportion than the 20 percent of income they spent before the advent of Medicare.

The number of Americans without insurance has, meanwhile, grown to 43.6 million at last count, the highest since 1998, according to the Census Bureau. Billions of dollars of their health costs are absorbed by hospitals or federal programs, and experts say that the uninsured skimp on care, compared with people who have workplace coverage. Still, uninsured families this year are averaging $772 in out-of-pocket spending, said Jack Hadley, a health care researcher at the Urban Institute, a policy research group in Washington.

All these trends fall most heavily on people who are sick or who otherwise are heavy consumers of medical services. They are also fueling national policy debates, like the push for a Medicare drug benefit, the campaign for loosened restrictions on imported drugs and calls for expanded public programs by most of the Democratic presidential candidates.

"Shifting costs to patients, particularly in the form of higher deductibles for hospital care, disproportionately affects the sickest Americans," said Karen Davis, president of the Commonwealth Fund. "It is not an acceptable response to rising health care costs to make care so expensive that those who need it fail to get it."

Some health care economists — and many insurance companies — argue that costs will never come under control until the users of medical services feel the financial sting. Generous coverage, they contend, long gave Americans and their doctors a perverse incentive to indulge in wasteful consumption of expensive drugs and diagnostic tests. In its more restrictive forms, managed care made patients jump through bureaucratic hoops to obtain treatment, but experts say it, too, did little to expose consumers to the true costs of health care.

"Employees who were paying $20 for a doctor visit had no idea that the average cost was really $93," said Liz Rossman, vice president for benefits at Sears, Roebuck & Company. In the current sign-up period, Sears is hoping that many employees will select new plans that require them to pay 20 percent of the full cost of doctor visits, hospitals and brand-name drugs, or 25 percent for going outside the Sears network.

Hewitt said that a few large employers were offering a new type of health plan, sometimes called consumer directed, that gives workers an unfiltered view of health bills — and often increases their costs. Employees get an allowance to spend on medical expenses. If they exhaust it, they use their own money until they reach a limit, typically $3,000 to $5,000, when the plan starts paying.

"The whole point is to change their purchasing behavior," said Kenneth Sperling, a consultant with Hewitt.

More commonly, some employers have shifted costs by offering limited basic coverage that employees can enhance by paying more in premiums.

But cutbacks in coverage can be brutal for some patients.

"I'm having to beg for my insulin," said Cathy Barkovich, 33, a diabetes patient in Harmony, Pa.

She said her husband's health plan stopped paying for her brand-name prescriptions in July; the American Diabetes Association says that no generic equivalent exists. When she applied to a manufacturer's free insulin program, she was told that only uninsured patients were eligible. Her husband, a $40,000-a-year interstate bus driver, is considering dropping their coverage so she can get the drug, Ms. Barkovich said.

Last year, shifting costs to patients — mainly in drug coverage — "probably took a percentage point off" the increase in the use of medical services, which has been rising at about 9 to 10 percent a year, said Mr. Ginsburg, the health economist. Almost two in three employers now require patients to pay higher co-payments for drugs not on a preferred list: flat rates as high as $30 per prescription, or sums as high as 29 percent of the actual cost.

"People view that as a success in discouraging the use of the most expensive drugs," said Gary Claxton, a vice president of the Kaiser Family Foundation, whose survey of employer health benefits was published last month. Whether recent increases in deductibles and co-payments for hospitals will also reduce the use of services is not yet clear, he added.

http://www.nytimes.com/2003/10/22/business/22CARE.html?pagewanted=all&position=