Struggling to keep up with insurance cost

Linda Carruthers tries hard to be responsible, to do the right thing, to stay insured.

But the 62-year-old widow in Upper Dublin recently found out her health-insurance premiums will rise more than 45 percent in January, from $6,384 to $9,336 a year.

"How do you justify raising premiums 45 percent in January 2009?" she e-mailed her insurer, Independence Blue Cross. "I will soon be one of the 50,000,000 uninsured because of your outlandish costs."

Her husband of 37 years, a teacher, died four years ago. She is insured through a group HMO plan, for retired teachers and spouses ages 55 to 64, with the Pennsylvania Public School Employees' Retirement System.

Carruthers lives on $15,360 a year in Social Security and $10,000 she withdraws from her IRA.

She said she believed strongly in paying for insurance but felt "the system is broken."

She added: "I don't want a handout. The problem has to be fixed. It's suffocating the middle class."

Many factors contributed to a 119 percent rise in insurance premiums for U.S. employers between 1999 and 2008, from $5,791 to $12,680 for a family of four, according to the Kaiser Family Foundation.

Blue Cross replied to Carruthers, saying inflation and new technology were driving up costs. Liz Williams, a Blue Cross spokeswoman, said two other factors had led to the big increase in Carruthers' premium:

First, Blue Cross changed the rating system for all Keystone Health Plan East HMO plans, including the one Carruthers belongs to. The change was made to provide more transparency and less confusion, Williams said, and done at the request of customers.

Second, Williams said, "the amount IBC paid for this group's health care in 2008 was greater than the premiums we received. That can happen for a number of reasons: because we rated incorrectly, because there was illness that was expensive to treat, because of the age of this group."

Carruthers understands that her group can be expensive. She fell and fractured a tibial plateau (the shinbone just below the knee) in late November 2007, requiring surgery and five days in the hospital. She saw the bills. Abington Memorial Hospital billed Blue Cross $57,619 for all her tests, doctors, drugs, etc., and Blue Cross paid Abington $11,100, according to her records.

Carruthers paid just $600 - a $100-a-day deductible for the hospital stay and a $100 emergency-room deductible.

She will have surgery next month to remove 11 screws from her leg, she said.

Carruthers is very representative of Americans her age.

While health care for this age group can be expensive - as her case illustrates - her peers are the most likely to be insured.

Only 12 percent of Americans between 55 and 64 - compared with 30 percent between 19 and 24 - did not have health insurance in 2007, according to the Kaiser Family Foundation.

Of the 45 million Americans without any insurance in 2007, four million, about 9 percent, were 55 to 64, according to Kaiser.

Carruthers is increasingly unlike other Americans in another way: She has retirement health benefits. In a Kaiser survey this year, 31 percent of firms with 200 or more workers offered health benefits to retirees, down from 66 percent in 1988.

Mark Pauly, a health-policy expert at the University of Pennsylvania's Wharton School, suggested that Carruthers might be better off on her own, finding cheaper insurance through an individual plan if she is in relatively good health.

Carruthers is reluctant to do that, knowing that however sick or expensive she might get, she is secure in her plan until she reaches Medicare eligibility at 65.

She said she expected to live 20 or 30 more years and did not want to run out of money. Her parents are 86 and 85.

She has $200,000 in retirement savings but has been advised not to draw more than $10,000 a year to supplement Social Security.

"I need to spend wisely so I don't outlive my money," she said.

She tries to be frugal.

As a widow, Carruthers sold the family home on a three-quarter-acre lot and moved to a smaller house.

"I keep my programmable thermostat at 67 degrees in the winter (57 at night)," she wrote in an e-mail, and she wore a heavy sweater during an interview in her living room.

"I drive a 1996 Toyota less than 4,000 miles a year, so gas is not much of an issue," she said. "I don't drink coffee, so no Starbucks expenses to eliminate."

Her mortgage is $288 a month, property tax $4,300 a year.

"Travel is minimal, and vacations are usually with family or friends," Carruthers said. "The holidays and other gift giving are limited." She shops for groceries with coupons and pays her full credit-card bill each month for cash rewards.

"As you can see," she said, "I have few places to cut expenses."

Carruthers worked part time much of her life, raising three children, and has no pension or benefits of her own.

She has $300,000 equity in her home, but figures in 10 or 20 years she'll need that to buy into an assisted-living community or a nursing home. She knows long-term care costs eat up money fast.

Her insurance premiums have even affected her love life.

The other day, Carruthers had her first date in 42 years with a man she met on Match.com.

Lunch at Chili's was pleasant, but she didn't feel they had much in common, and she said she was pretty sure there wouldn't be a second date.

And, likely, no more dates at all.

She said Match.com - $39.95 for one month, or $19.95 a month for six months, essentially $120 - was an extravagance she couldn't afford.

"There's a guy in Ambler I'd like to meet," she said, "but I can't pay $19.95 a month."