Rate of Increase in Health Care Costs Dips
WASHINGTON — After four years of double-digit increases, premiums for employer-provided health insurance in the U.S. rose only 9.2 percent in 2005, according to the annual survey released Wednesday by the Kaiser Family Foundation and Health Research and Educational Trust.
“The good news is the rate of increase in health care costs is down,” said Kaiser Foundation President Drew Altman. “The bad news is that’s the only good news.”
For example, he said, even that slower rate of increase still has health insurance premiums rising more than twice as fast as overall inflation, and more than three times faster than workers’ wages.
Another troubling trend in the annual survey, Altman said, is the continued decline in the percentage of employers offering health insurance to their workers. This year 60 percent of employers are offering coverage, down from 69 percent in 2001 and 66 percent in 2003. Altman called the trend “a slow but perceptible deterioration of our employer-based (health insurance) system.”
Nearly all the decline came from smaller businesses, those with fewer than 200 workers. This year 59 percent of those firms are offering coverage, down from 68 percent just five years ago. Nearly all larger firms continue to offer health insurance as an employee benefit.
The increases in premiums help explain the decline. This year the average annual premium for a single employee is $4,024, while the average premium for family coverage is $10,880. That is more than the gross earnings of an individual working full-time at the minimum wage of $5.15 per hour, Altman noted.
And while employers are paying a steady share of those premiums — about 84 percent for individual workers and 74 percent for families — the dollar amounts have risen precipitously for both. The average single worker pays $51 a month for his or her share of employer-provided health coverage in 2005, up from $30 a month in 2001; the average worker contribution for family coverage has risen from $149 per month in 2001 to $226 this year.
Despite all the talk in health policy circles about Health Savings Accounts and other “consumer-driven” health care programs, they are still relatively rare in employer-provided coverage, the survey found.
While one in five employers offers a “high-deductible” health plan, fewer than 4 percent combine those plans with tax-preferred Health Reimbursement Accounts or Health Savings Accounts. “The jury is still out on whether employees feel that these arrangements work for them, particularly when they get sick, and on whether employers feel that they have a real impact on costs,” said Kaiser Vice President and study co-author Gary Claxton.
The findings are based on a survey of 2,013 randomly selected public and private employers with three or more workers between January and May of this year.