Health insurance premiums grow faster than wages, inflation

While this year’s survey recorded the slowest rate of premium growth since 2000, the 7.7 percent increase was still about twice as much as the rates of worker wage increases (3.8 percent) and overall inflation (3.5 percent).

Data also shows that premiums have increased 87 percent in the last six years. Family health coverage now costs an average of $11,480 a year, with workers paying an average of $2,973 toward the premiums. That amount is about $1,354 more than workers paid toward coverage in 2000.

“While premiums didn’t rise as fast as they have in recent years, working people don’t feel like they are getting any relief at all, because their premiums have been rising so much faster than their paychecks,” said Kaiser Family Foundation President and CEO Drew E. Altman in a news release. “To working people and business owners, a reduction in an already very high rate of increase just means you’re still paying more.”

HRET President Mary A. Pittman noted that the burden of a fragmented system of health care coverage hits small businesses hardest.

“About two in five small businesses do not even offer health insurance, and those that do require workers on average to contribute significantly more to their premiums for family coverage,” she said.

Consumer-driven choices

As debate continues about consumer-driven health care, the survey also examined enrollment in consumer-driven plans. According to survey data, 2.7 million workers, including those who qualify for health savings accounts, are enrolled in high-deductible plans with a savings option. About 7 percent of employers that offer health benefits are offering such plans, and about 4 percent of covered workers are enrolled in HSAs; that percentage hasn’t changed since 2005.

By comparison, 60 percent of covered workers are enrolled in preferred provider organizations; 20 percent in health maintenance organizations; 13 percent in point-of-service plans and 3 percent in traditional indemnity plans.

“We don’t know yet whether workers and employees ultimately will embrace consumer-driven health plans in big numbers, but certainly, it hasn’t been a tidal wave,” said Gary Claxton, co-author of the study and vice president of the Kaiser Family Foundation.

Survey specifics

The annual Kaiser/HRET survey was conducted January–May and polled 3,159 randomly selected, nonfederal public and private firms with three or more employees. Of those firms polled, 2,122 responded to the full survey, and 1,037 responded to an additional question about offering coverage.

Other key findings in the survey:

• About 61 percent of firms nationwide offer health benefits to at least some of their workers. Nearly all large businesses with at least 200 employees offer benefits for workers, but less than half of the smallest firms, with three to nine workers, make them available.

• Workers in 2006 are paying an average of $259 more toward the cost of family health coverage.

• The average in-network PPO deductible for workers facing deductibles was $473 for single coverage in 2006. Average co-payments for drugs across all plan types were $11 for generic drugs, $24 for preferred drugs and $38 for nonpreferred drugs.

• Few employers are confident in the effectiveness of strategies to contain health care costs. Seventeen percent of small employers and 28 percent of large employers said they considered disease management programs very effective in controlling health care costs.

The Kaiser Family Foundation is a nonprofit private foundation dedicated to providing information and analysis on health care issues.

The Health Research and Educational Trust is a private not-for-profit organization that deals with research, education and demonstration programs for health management and policy issues.[[In-content Ad]]