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Family Health Insurance Costs Up 9.2% in Year

Posted on: Sunday, 18 September 2005, 09:00 CDT

The average cost of health insurance to cover a family of four has grown to exceed the income of a minimum-wage earner, according to an annual study by the nonprofit Kaiser Family Foundation and the Health Research Educational Trust.

The study, published each fall before open-enrollment season begins, is considered the definitive measure of what coverage will cost workers and employers.

This year it found average annual premiums for family coverage grew 9.2 percent since last year to $10,880, including company contributions -- more than the $10,712 a worker earns before taxes at the federal minimum wage. Since 2000, premiums have gone up 73 percent, while wages have grown 15 percent, Kaiser researchers concluded.

The premium increase is less than the Kaiser survey has found in recent years -- the jump was 11.2 percent in 2004 and 13.9 percent in 2003 -- but it continues a relentless rise in premiums that is hard on employers and families alike.

The result: job-based health insurance -- the central pillar of America's health insurance system -- is beginning to crumble. Rising costs have forced many businesses, especially smaller companies, to stop offering coverage, and some employees who can no longer afford insurance at work are buying it on their own -- or going without.

"What we are seeing is an unraveling of the way we finance health care in the United States," said William Custer, director for the Center for Health Services Research at Georgia State University in Atlanta. "It is coming apart at the edges, and those edges are small business and low-wage workers. The levees are breaking."

The Kaiser Foundation survey, which collected data from 2,995 randomly selected U.S. employers, estimated that the average worker's share of premiums for family health coverage was $2,713 in 2005, or about a quarter of the total cost. The average employee contribution is up by more than $1,000 in three years.

Employers, equally hard-pressed by the increases, increasingly are dropping health coverage as an employee benefit or offering high- deductible plans that shift more cost -- and more risk -- on to employees. Just 60 percent of businesses offered health insurance in 2005, down from 69 percent in 2000, the study found.

Employer-sponsored health care traces its roots back to wage and price controls implemented by the government during World War II. To attract workers, some companies began offering health benefits as a perk, said John R. Graham, director of health care studies at the Pacific Research Institute in San Francisco. But "employers don't have a competitive advantage to providing you health insurance any more than they have in buying you a house or a pair of running shoes," Graham said.

Source: Buffalo News

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