HEALTH BENEFITS: Employers Absorb Premium Hikes
Health insurance premiums in the past year have shown the highest rate of increase in seven years, with employers swallowing most of the cost, according to an annual survey by the Kaiser Family Foundation and the Health and Research Educational Trust released yesterday, the Pittsburgh Post-Gazette reports. Profiling 3,402 public and private employers of all sizes between January and May, the survey revealed that premiums for employer-provided health coverage shot up 8.3% in the past year, with average annual premiums rising to $2,426 for single coverage and $6,351 for families, nearly twice last year's average increase of 4.8%. Smaller firms with three to 199 employees encountered the highest premium increase of 10.3%, while larger companies employing more than 200 experienced a 7.5% increase. Employers noted prescription drug spending as a key contributor to higher costs. Yet a growing economy and tight labor market have led more employers to offer health benefits despite these inflating costs; 67% of small companies employing between three to 199 workers offered coverage this year, versus 60% in 1999. Further, 99% of firms with 200 or more employees provided health insurance in 2000. Kaiser Family Foundation President Drew Altman said, "More than nine years into our longest economic expansion on record, more employers are now using health insurance coverage to attract and keep workers, and are absorbing rising costs rather than passing them on to their employees. But this may change if the economy cools down, and the bigger challenge that still remains is how to help the 44 million Americans who are uninsured despite the robust economy." Employees actually are paying less for their coverage than previously, contributing an average of $28 per month for single coverage and $138 for families, compared to $35 and $145, respectively, in 1999 (Smolkin, 9/8). However, the survey also discerned "a very dramatic increase in underlying claims expenses" due to the rising costs of prescription drugs, Jon Gabel of the HRET said, and large increases in self-insured plans reflecting actual medical costs were also reported. Furthermore, health benefits for low-income workers continue to remain sparse, as only 35% of companies paying more than one- third of workers less than $20,000 per year offered health coverage this year, compared to 85% of firms with higher-salaried employees. The survey was conducted by National Research LLC and has a 3 point error margin (Rovner, CongressDaily, 9/7).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.