By Ceci Connolly
Washington Post Staff Writer
Tuesday, September 28, 2004; Page A01

In the past four years, Americans have spent an ever-growing portion of their paychecks on health care and for the most part gotten less for their money, forcing millions into the ranks of the uninsured or personal bankruptcy, according to government figures and several independent assessments.

Nationwide, workers' costs for health insurance have risen by 36 percent since 2000, dwarfing the average 12.4 percent increase in earnings since President Bush took office, the liberal consumer group Families USA reports in an analysis scheduled for release today. The number of Americans spending more than a quarter of their income on medical costs climbed from 11.6 million in 2000 to 14.3 million this year, according to the group.

The news comes as many companies are dropping medical coverage entirely or trimming their benefit packages, while taxpayers are subsidizing millions of people below the poverty line who have enrolled in the state-run Medicaid and Children's Health Insurance Program, a separate survey by the Kaiser Family Foundation found. Hardest hit have been low-income working families, Hispanics and people with chronic conditions such as diabetes, asthma or depression.

"The cost of family health insurance is rapidly approaching the gross earnings of a full-time minimum-wage worker," said Drew Altman, president and chief executive of the nonprofit foundation, which compiled the data. "If these trends continue, workers and employers will find it increasingly difficult to pay for family health coverage, and every year the share of Americans who have employer-sponsored health coverage will fall."

That trend has already begun. From 2001 to 2004, the proportion of workers receiving health coverage through an employer fell from 65 percent to 61 percent, according to the latest Kaiser data. That decline translated into 5 million fewer jobs providing health benefits, with the sharpest drop in small businesses.

The impact on businesses cuts across the board, however, according to a survey of 900 businesses by Mercer Human Resource Consulting. The report projects a 9.6 percent increase in health care spending per employee in 2005.

"For many employers, an increase of this magnitude -- four times the rate of general inflation -- is painful to consider," said Mercer spokesman Blaine Bos. "And some just aren't going to sit still for it."

A variety of factors have conspired to create a financial crunch in the medical sector not seen since 1992, when the issue helped propel Bill Clinton into office. A recession, followed by tepid economic growth, an aging population and expensive new tests and treatments have all contributed. But an even more fundamental phenomenon is at the heart of what experts term an "unsustainable" system.

Both the public and government leaders "are too accepting of the notion everyone should get all the medical care they like," said Paul B. Ginsburg, president of the Center for Studying Health System Change, a nonprofit policy research group in Washington. "I don't think any country can afford that." In many instances, the care is not only expensive but wasteful, he added, citing research casting doubt on the value of certain types of arthroscopic knee surgery, hormone-replacement treatment and full-body scans.

The number of Americans without health insurance for all of 2003 hit a record 45 million, or 15.6 percent of the population, the highest percentage since 1998, when it was 16.3 percent, according to the latest Census Bureau figures. An analysis by the Lewin Group for Families USA, however, estimates that over a two-year period the number of people lacking insurance for at least one month is much higher and rising.

In 2003-2004, about 85 million were uninsured for some period of time, an increase of 12.7 million over the 1999-2000 estimates. Uninsured rates for Hispanics jumped from 50 percent to 61 percent.

By most financial measures, the health care system is broken, agreed Robert E. Moffit, director of the Center for Health Policy Studies at the conservative Heritage Foundation. He added that harder-to-quantify medical breakthroughs offset some of the burden of rising costs.

"Yes, we're spending more, but we're also getting more," he said. Moffit pointed to newer diagnostic tests, less-invasive surgery and prescription medications as evidence that the typical patient gets more for the health care dollar today, and that, in turn, reverberates throughout the economy.

In years past, clinically depressed people "could not get out of bed in the morning, could not go to work, or if they did, had problem interactions with co-workers," he said. With medication, "those people today are productive members of society who go to work and pay taxes."

For four straight years, Americans have paid double-digit increases in health insurance premiums, bringing the price for a typical family of four to nearly $10,000. Premiums paid by workers in 26 states and the District climbed 40 percent, according to Families USA. Premium increases in Virginia and Maryland rose at a lower rate but were still 2.4 times the average rise in earnings.

Though concern for the uninsured trails health care costs on most political surveys, liberal and conservative analysts agree that it affects everyone. Patients without insurance typically wait longer to see a physician and frequently receive care at an emergency room, where charges are higher.

"Hospitals and physicians recover these dollars by raising fees and charges, which in turn increases total private insurance costs," says the Families USA report.