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Health Insurance Premiums Outpace Workers' Wages

Employees' share of family coverage jumped 10 percent in 2004, survey finds

THURSDAY, Sept. 9, 2004 (HealthDayNews) -- Premiums for employer-sponsored health insurance in the United States are rising five times faster than workers' earnings, a survey released Thursday shows.

Premiums increased 11.2 percent, on average, in 2004, according to the Kaiser Family Foundation and the Health Research and Educational Trust (HRET), sponsors of the annual employer health benefits survey.

While not as high as last year's 13.9 percent increase, this year's increase is still five times the rate of inflation and five times the rate of growth in workers' earnings. It also marks the fourth year of double-digit premium inflation, according to the survey.

As a result, health-care costs continue to affect hiring and remain a No. 1 issue in collective bargaining, according to Christine L. Owens, director of public policy with the AFL-CIO.

"There's no question that higher health-care costs and cost-shifting onto workers is a significant factor in the rising number of uninsured workers," Owens said during a press briefing in Washington, D.C., Thursday morning.

As health-care costs surge, workers are shouldering a mounting share of the financial burden, particularly for family coverage.

The annual premium for a plan covering a family of four averaged $9,950, or $829 a month, in 2004, the survey found. Workers contributed $2,661 -- or 10 percent more than they spent the prior year.

For single coverage, workers contributed an average of $558 toward the $3,695 annual premium this year. Employees' share was statistically unchanged from 2003.

Over time, though, annual increases in worker cost-sharing add up. Since 2001, employees' share of health insurance costs has soared 57 percent for single coverage and 49 percent for family coverage, the survey reported.

"Last year, the changes were statistically insignificant, but taken over four years you've got some real money," said Jon Gabel, vice president of health system studies at HRET, a nonprofit research group.

A total of 3,017 employers with at least three workers each participated in the survey, conducted between January and May. The findings appear in the September/October issue of the journal Health Affairs.

The percentage of people getting health coverage from their employer remained relatively unchanged, at 61 percent in 2004 versus 62 percent in 2003. But those levels are off a recent high of 65 percent in 2001. As a result, roughly five million fewer workers are now getting health insurance through their jobs.

Employer-sponsored PPOs, the most popular type of health insurance coverage, also were the priciest in dollar terms, with annual premiums topping $10,000 for a family of four. Workers picked up $2,691 of the $10,217 total in 2004.

Most workers, whether they have single or family coverage, encountered at least modest increases in out-of-pocket spending as well, the survey found.

Twenty-seven percent of covered workers now pay out $20 for a physician office visit, up sharply from 16 percent in 2003. Prescription drug copayments, up slightly from last year, range from $10 for generics to $21 for preferred drugs and $33 for non-preferred drugs.

To keep a lid on costs, 56 percent of employers shopped for a new health plan this year. Of those, 31 percent made a change in insurance carriers and 34 percent changed the type of plan they offered, the survey found.

As for the future, about half the large employers surveyed, those with at least 200 workers, said they were very likely to boost employee contributions in 2005. Only 15 percent of small firms, those with at least three but less than 200 workers, plan to shift more costs to employees next year.

Still, smaller businesses are finding it increasingly difficult to extend health insurance coverage at all. Sixty-three percent of small firms offered health benefits to their workers in 2004, down from 68 percent in 2001.

"There just aren't that many options left for smaller businesses," said Kate Sullivan Hare, executive director of health care policy for the U.S. Chamber of Commerce.

As costs mount, she added, "they are not going to be doing the family coverage subsidies; they can't afford to do it."

More information

For details on the employer health benefits survey, visit the Kaiser Family Foundation.

SOURCES: Jon Gabel, vice president, health systems studies, Health Research and Educational Trust, Chicago; Christine L. Owens, director of public policy, AFL-CIO, Washington, D.C.; Kate Sullivan Hare, executive director, health care policy, U.S. Chamber of Commerce, Washington, D.C.; Sept. 9, 2004, news conference, Employer Health Benefits 2004 Annual Survey, conducted by Kaiser Family Foundation/Health Research and Educational Trust, Washington, D.C.; September/October 2004, Health Affairs
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