• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Fewer firms offer health insurance, cite costs

Posted on: Wednesday, 14 September 2005, 09:02 CDT

By Susan Heavey

WASHINGTON (Reuters) - The number of U.S. employers providing health insurance for their workers fell further in 2005, mostly among smaller companies that said they could not afford the coverage, according to a study released on Wednesday.

About 60 percent of businesses said they would offer health plans in 2005, down from 69 percent in 2000, according to a survey of nearly 3,000 companies by the Kaiser Family Foundation and Health Research and Educational Trust.

The number of employers providing coverage had stabilized briefly in 2002 and 2003 at 66 percent, but then began falling again in 2004, to 63 percent.

Employers that did not offer coverage said cost was the main factor, with 73 percent citing high premiums charged by insurers. About half also said their small size prevented them from offering a plan, while about one-third said their workers could get coverage elsewhere.

Kaiser officials said people who earn less are particularly vulnerable. Not only could their benefits be cut because of higher health care costs, but they are less able to afford their own coverage than those with higher incomes.

"It is low-wage workers who are being hurt the most by the steady drip, drip, drip of coverage draining out of the employer based health insurance system," said Drew Altman, head of Kaiser's foundation.

Premiums are also rising, but not as much as in recent years, the report said. They were up an average of 9.2 percent in 2005, compared with an 11.2 percent rise in 2004. Premiums had been increasing since 1996, with their sharpest recent gain at 13.9 percent in 2003.

Still, Kaiser officials said the 2005 increase -- like that of many other health care services and products -- is far outpacing inflation and wages.

Gary Claxton, a Kaiser vice president and a lead author of the study, said small companies are especially squeezed and have to decide whether to offer lower wages or cut health care benefits.

"On average, there are more small firms where people are paid less," he said.

The telephone survey polled 2,995 public and private companies with at least three workers between June and May.

The study also found that while some companies are offering high-deductible plans as a way to trim costs, few workers are signing up.

About 20 percent of companies that offer any coverage said they would provide such plans, which require patients to pay at least $1,000 in out-of-pocket costs before the insurance kicks in. In 2004, half as many companies offered them.

Mostly larger businesses -- those with 5,000 or more workers -- used the high-deductible plans, which aim to curb unnecessary care. But researchers said it was not clear how willing workers were to shoulder more costs.

"Consumer-driven plans are proving attractive to some, but with just a couple million people now enrolled, it's too early to know whether they'll have a meaningful effect on the health system," Claxton said.

One area where costs remained stable was U.S. workers' share of their company-funded plans, the study said. In 2005, they paid about 26 percent of the total cost on average, or about $2,713.

The Kaiser Family Foundation, which is not affiliated with health insurer Kaiser Permanente, and the Health Research and Educational Trust are both nonprofit, private groups that focus on health policy and research.

Source: REUTERS

More News in this Category