Study: Employer Health Premiums Rise 11%

By Allison Bell

NU Online News Service, Sept. 10, 11:15 p.m. EDT?Employer-sponsored health insurance premiums have increased an average of 11 percent since last year, to $3,695 per year for individual coverage and $9,950 per year for family coverage, two organizations reported.[@@]

The figures were contained in a study by Henry J. Kaiser Family Foundation, Menlo Park, Calif., and the Health Research and Educational Trust, Washington.

Their report was based in a survey of 3,017 public and private employers with three or more employees. Researchers conducted the survey between January and May.

The typical worker has family preferred provider organization coverage. The average cost of family PPO coverage has increased 9.7 percent in the past year, to $10,217 per year.

The overall rate of increase has slowed from the 14 percent increase reported in 2003, and the researchers noted that employers were somewhat less aggressive about shifting costs onto employees' shoulders.

About 61 percent of employees have health coverage this year, down only slightly from the coverage level of 62 percent reported in 2003.

But the Kaiser survey has found health premiums increasing an average of 10 percent or more for four consecutive years.

Drew Altman, president of the Kaiser Family Foundation, said in a statement about the findings, "The cost of family health insurance is rapidly approaching the gross earnings of a full-time minimum wage worker."

Since President Bush took office in 2001, premiums for family coverage have increased 59 percent. That compares with overall inflation of 9.7 percent and wage growth of 12 percent.

The Kaiser survey found another major shift in the group health market: 10 percent of the employers surveyed now offer high-deductible health plans, and 3.5 percent offer some kind of personal health account along with a high-deductible plan. Another 27 percent of the employers are "very likely" or "somewhat likely" to offer a high-deductible plan option within the next two years.

Meanwhile, only 5 percent of the employers surveyed still offer traditional indemnity insurance plans.

U.S. Senator Olympia Snowe, R-Maine, responded to the survey results by calling on the Senate to pass her association health plan bill, S. 545, which has received strong support from President Bush.

The bill would let multistate associations set up self-funded health plans for small businesses that happen to be members.

Small business groups support the measure, arguing that an AHP program would help small businesses enjoy the same freedom from state benefits mandates that large employers that can afford to start their own self-funded health plans now enjoy.

Opponents, including America's Health Insurance Plans, Washington, and the National Association of Health Underwriters, Arlington, Va., contend that an AHP program would hurt private health insurers by forcing them to compete with lightly capitalized, lightly regulated organizations that would lure away the small groups with the healthiest employees.

Sen. John Kerry, D-Mass, the Democratic presidential nominee, opposes the AHP proposal, but he responded to the Kaiser survey results by promoting a proposal that has some similarities to the AHP proposal.

Mr. Kerry's proposal would also let small employers team up and avoid state benefits mandates, but his proposal would address concerns about small, lightly regulated AHPs by turning the Congressional health plan into the base for a kind of giant, national AHP.

Mr. Kerry also would set up a reinsurance program to protect private health plans from some of the cost of caring for members with unusually high claims expenses.

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Study: Employer Health Premiums Rise 11%

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