Health insurance premiums climb five times faster than workers' pay and inflation.

Navigation: Main page

Author: Unknown

FINDINGS

The rate of growth of employer-sponsored health insurance premiums moderated somewhat in the last year, but continues to grow at double-digit rates, according to the 2004 Annual Employer Health Benefits Survey released in September by the Kaiser Family Foundation and Health Research and Educational Trust.

Perhaps reflecting several years of high premium growth and a slow economy, the survey also found that the percentage of all workers receiving health coverage from their employer fell from 65 percent in 2001 to 61 percent in 2004. As a consequence, the study estimates that there are at least 5 mil lion fewer jobs providing health insurance in 2004 than in 2001. A likely contributing factor is a decline in the percentage of small firms (3-199workers) offering health insurance. Roughly 63 percent of all small firms offer health benefits to their workers, down from 68 percent three years ago.

As employers look for ways to hold down costs, there has been growth in the number of firms offering consumer-direct ed health plan arrangements, specifically those that combine a high-deductible plan with a personal or health savings account option. Despite increased interest, only a small percentage of employers currently offer a high-deductible plan with a personal or health savings account option.

Between spring of 2003 and spring of 2004, premiums for employer-sponsored health insurance rose by 11.2 percent, lower than the 13.9 percent increase in 2003, but still the fourth consecutive year of double-digit growth. Premiums continued to increase much faster than overall inflation (2.3 percent) and wage gains (2.2 percent). Since 2001, premiums for family coverage have increased by 59 percent, compared with inflation growth of 9.7 percent and wage growth of 12.3 percent.

Average premium increases in 2004 are similar across firm sizes and plan types, but there is significant variability around the average: 24 percent of employees work for firms where premiums increased by 5 percent or less, while 28 percent of employees work for firms where premiums increased by more than 15 percent.

Average annual premiums for employer-sponsored coverage rose to $3,695 for single coverage and $9,950 for family coverage. Although PPOs cover a majority of insured workers, HMOs remain less expensive. Annual PPO premiums for single and family coverage are $3,808 and $10,217, respectively, compared with annual HMO premiums of $3,458 for single coverage and $9,504 for family coverage. Premiums in fully insured plans and premium equivalents in self-funded plans grew at similar rates.

This is the sixth year the joint survey was conducted by Kaiser and HRET, and the 17th year the survey has been conducted overall. Findings appear in the September/October issue of Health Affairs.

For information, visit www.kff.org.

The study estimates that there are at least 5 million fewer jobs providing health insurance in 2004 than in 2001