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June 18, 2007

Health care costs spark new tensions

Becky Bikul faced a tough choice the last time her union contract was up: take a smaller raise or pay more for health insurance.

The 29-year-old collections agent for AT&T opted for raises that barely keep pace with inflation, but in return received health insurance almost entirely covered by the company.

Businessman Bill Heller feels the pinch of soaring health costs from the opposite perspective. Each year around Christmas he learns he'll have to pay thousands more in the coming year to cover his 30 workers, who build air conditioning parts at a plant in North San Jose. With steel, copper and gasoline prices ticking up, Heller says, "It's all an assault on the bottom line."

As California Gov. Arnold Schwarzenegger and Democratic leaders negotiate legislation this summer to revamp the state's health care system, experts say no problem threatens to undermine their efforts more than surging costs. Insurance premiums this decade have ballooned 87 percent nationally — and at a similar clip in California — chipping away at profits and forcing many workers to pay more for shrinking benefits.

Rising costs have transformed health care from a problem primarily about the growing ranks of uninsured.

Creative Imaging Center!— some 6.6 million people in California go without benefits for all or part of any year — to one that touches nearly everyone.

That is especially so in the workplace, where health care costs are creating new tensions between companies and employees. Many businesses that used to provide expansive benefits are scaling them back and asking workers to sacrifice, in one form or another. And both sides are demanding action from government.

"A new era in the health care debate has emerged in the last few years, where a wide group of people are seeing costs go up and it's not economically sustainable," said Peter Harbage, an independent health care consultant based in Sacramento.

Earlier this decade, he said, it was harder to engage the public on health care.

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Posted by healthinsurance at June 18, 2007 12:12 PM