September 14, 2005-- Posted at 2:50 PM CDT
(HealthDay News) -- The rate of growth of health insurance premiums declined for the second year in a row, slowing to 9.2 percent in 2005.
But premiums are still significantly outpacing wages and inflation, according to the 2005 Annual Employer Health Benefits Survey, issued by the Kaiser Family Foundation and the Health Research and Educational Trust.
Today, health insurance premiums for a family of four are just shy of $11,000 a year, or about equal to the full-time earnings of a minimum-wage worker.
"The 9.2 percent decline is lower than the last two years of rates of growth but it's still substantially above the other indicators in the economy such as growth and wages and inflation," said Gary Claxton, co-author of the survey and a vice president at the Kaiser Family Foundation in Washington, D.C. "What we continue to see is that premiums are moving away from wages. It continues the questions we have about the affordability of coverage."
In addition, the percentage of all U.S. companies offering health benefits to employees has fallen from 69 percent to 60 percent over the last five years. The decline has been driven largely by fewer small firms offering coverage, the survey found.
Results of the survey were released Wednesday at a press conference in Washington, D.C., and some findings will also be published in the journal Health Affairs.
The new data certainly fit with the latest trends, said John Tropman, professor of nonprofit management and management and organizations at the University of Michigan, and author of Total Compensation Solution. "Fringe benefits [including health insurance, pensions, etc.] have become very expensive," he said. "Employers are trying to move to a more controlled-cost picture."
In addition, U.S. businesses are competing with companies in other countries that often don't offer high-cost fringe benefits such as health care. "Companies that have significant fringe-benefit costs have to work that into the pricing structure, which other countries don't," Tropman said. "I think we're going to see those trends continue."
In the United States, health insurance sponsored by employers provides coverage for 160 million Americans, or nearly three of every five non-elderly individuals, the report stated.
This annual survey of private and public employers compiled data from telephone surveys of 2,013 companies with three or more workers.
The slowing of the rate of growth of premiums to 9.2 percent was less than the 11.2 percent increase seen in 2004, but still greater than overall inflation (3.5 percent) and wage gains (2.7 percent), the report said.
Since 2000, premiums for coverage for a family have increased by 73 percent, compared with inflation growth of 14 percent and wage growth of 15 percent. In dollar terms, average annual premiums for employer-sponsored coverage rose to $4,024 for single coverage and $10,880 for family coverage, according to the report.
Here are some of the other findings:
- Almost 80 percent of workers with single coverage and more than 90 percent of workers with family coverage are making contributions toward premiums in 2005.
- More companies that offer health benefits are offering high-deductible plans (defined as $1,000 deductible for single coverage, $2,000 for family coverage): In 2005, 20 percent of firms offered such plans, up from 10 percent last year and 5 percent the year before.
- Among companies that provide health benefits, 2.3 percent offer their employees the ability to set up a health savings account.
- Fifty-six percent of workers with coverage are in a health plan that requires that a deductible be met. In PPOs (preferred provider organizations), the average deductible for in-network services is $323 for single coverage and $679 for family coverage.
- Enrollment in PPOs grew over the last year while HMO (health maintenance organization) enrollment declined. PPOS enrolled 61 percent of employees with health coverage, up from 55 percent in 2004 and remain the most common type of plan, another reflection of employers' striving to contain costs.
- This year, one-third of firms with 200 or more workers are offering retiree coverage, about the same as last year but down from 66 percent in 1988.
Strains in the employer-sponsored health insurance system, such as rising premium rates, are starting to take a toll, the report stated.
"This has to make us continue to worry about whether lower-wage workers can pay their share," Claxton said. "You've got to believe that health care will continue to go up faster than the economy in general. For relatively well-off workers it's a lot but it's still manageable. We have to confront what this means for lower wage workers"
On Tuesday, a survey found that U.S. employers are facing nearly double-digit increases in health care costs in 2006, and consequently will be shifting more of that burden to their workers.
The preliminary survey of more than 1,800 firms, by Mercer Human Resource Consulting, found that employers anticipate an almost 10 percent increase in health-care costs next year, about three times the rate of general inflation, if they leave benefits unchanged, Associated Press reported.
By Amanda Gardner
For more on the Kaiser report, visit the Kaiser Family Foundation (www.kff.org ).