Cost of health insurance premiums US

[ken hanly <khanly@xxxxxxx>]

Premiums for employer-sponsored health insurance rose at about five times
the rate of inflation
Posted By: News-Medical in Miscellaneous News
Published: Sunday, 12-Sep-2004
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Employer-sponsored health insurance premiums increased an average of 11.2%
in 2004 -- less than last year's 13.9% increase, but still the fourth
consecutive year of double-digit growth, according to the 2004 Annual
Employer Health Benefits Survey released by the Kaiser Family Foundation and
Health Research and Educational Trust (HRET).
Premiums for employer-sponsored health insurance rose at about five times
the rate of inflation (2.3%) and workers' earnings (2.2%).

In 2004, premiums reached an average of $9,950 annually for family coverage
($829 per month) and $3,695 ($308 per month) for single coverage, according
to the new survey. Family premiums for PPOs, which cover most workers, rose
to $10,217 annually ($851 per month) in 2004, up significantly from $9,317
annually ($776 per month) in 2003. Since 2000, premiums for family coverage
have risen 59%.

The survey also found that the percentage of all workers receiving health
coverage from their employer in 2004 is 61%, about the same as in 2003 (62%)
but down significantly from the recent peak of 65% in 2001. As a
consequence, there are at least 5 million fewer jobs providing health
insurance in 2004 than 2001. A likely contributing factor is a decline in
the percentage of small employers (three to 199 workers) offering health
insurance over this period. In 2004, 63% of all small firms offer health
benefits to their workers, down from 68% in 2001.

"The cost of family health insurance is rapidly approaching the gross
earnings of a full-time minimum wage worker," said Drew Altman, President
and CEO of the Kaiser Family Foundation. "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."

"Since 2000, the cost of health insurance has risen 59 percent, while
workers wages have increased only 12 percent. Since 2001, employee
contributions increased 57 percent for single coverage and 49 percent for
family coverage, while workers wages have increased only 12 percent. This is
why fewer small employers are offering coverage, and why fewer workers are
taking-up coverage," said Jon Gabel, vice president for Health Systems
Studies at the Health Research and Educational Trust.

The survey was conducted between January and May of 2004 and included 3,017
randomly selected public and private firms with three or more employees
(1,925 of which responded to the full survey and 1,092 of which responded to
an additional question about offering coverage). This is the sixth year the
joint survey was conducted by Kaiser and HRET, and the 17th year this survey
has been conducted overall. Findings appear in the September/October issue
of the journal Health Affairs.

Survey highlights include:

Worker contributions.  This year, workers on average contribute $558 of the
$3,695 annual premium cost of single coverage and $2,661 of the $9,950 cost
of premiums for family coverage. Average employee contributions for single
coverage are statistically unchanged from 2003, while average employee
contributions for family coverage grew by 10% - a similar rate to the
average overall premium increase. The percentage of premiums paid by workers
is statistically unchanged over the last several years, at 16% for single
coverage and 28% for family coverage.
Cost-sharing.  Cost sharing rose modestly in 2004 compared to the larger
increases observed in recent years. Most covered workers are in health plans
that require a deductible be met before most plan benefits are provided. In
PPO plans, which cover more than half of all workers with health benefits,
the average deductible for single coverage is $287 for services from
preferred providers and $558 for services from non-preferred providers,
about the same as in 2003. In addition, half of covered workers must either
pay a separate deductible (average $224) or pay additional co-insurance
(averaging 16% of the costs) when they are admitted to the hospital. The
proportion of covered workers facing a $20 copayment for an office visit
increased to 27% in 2004 from 19% in 2003.
Consumer-driven plans.   While about 10% of all firms offer a
high-deductible plan to covered workers this year, only about 3.5% of those
firms offer a personal or savings account option along with a
high-deductible plan. These accounts permit employers (and sometimes
employees) to make pre-tax contributions, which can be used by employees to
pay for routine medical care. The survey finds that employers, particularly
larger firms, are interested in high-deductible plans (a plan with a
deductible of at least $1,000 for single coverage). About 6% of all firms
(accounting for 13% of covered workers) say that they are "very likely" to
offer such a plan within two years, and another 21% of all firms (accounting
for 26% of covered workers) say that they are "somewhat likely" to do so.
Type of insurance. In 2004, PPOs continue to be the most common form of
health coverage, with more than half (55%) of all employees with health
coverage enrolling in a PPO. HMOs, which cost significantly less than PPOs,
cover about 25% of covered workers. Conventional, or indemnity, benefit
plans have all but disappeared, covering just 5% of covered workers. These
enrollment shares are statistically unchanged from 2003.
"You have to look over the past several years to really understand why
Americans are so worried about health care costs. Just for premium
contributions alone, families are paying $1,000 more this year for their
health coverage than they paid in 2000," Dr. Altman said. "More than any
other factor, these out-of-pocket cost increases are what's driving voter
concern about health."

Facing continued premium increases, many employers say they looked to make
cost-saving changes in the past year. Among firms offering coverage, 56%
report that they shopped for a new plan in the past year. Of those firms,
31% (17% overall) report changing insurance carriers in the past year and
34% (19% overall) report changing the type of health plan offered.

When asked about future plans, about half (52%) of large firms (200 or more
workers) say they are "very likely" to increase employee contributions in
the next year. In contrast, just 15% of small firms (3 to 199 workers) say
that they are "very likely" to increase employee contributions next year.

Across all firms offering coverage, relatively low percentages say that they
are "very likely" in the next year to raise deductibles (9%), raise office
visit cost-sharing (5%), raise prescription drug copayments (5%), introduce
tiered networks for physicians or hospitals (2%), or restrict eligibility
for benefits (1%). In addition, 3% of firms say they are "very likely" to
drop health coverage entirely in the near future.

"Employers continue to look for ways to control the rising costs of health
insurance, with more than half shopping around for a better option and one
in six actually changing insurance carriers," said Gary Claxton, Vice
President and the Director of the Health Care Marketplace Project at the
Kaiser Family Foundation.

http://www.kff.org