Percentage of Employers That Offer Workers Health Insurance Has Decreased Since 2000, Study Finds
Sixty percent of U.S. businesses offered employer-sponsored health insurance to workers in 2005, compared with 69% in 2000 and 66% in 2003, as the cost of coverage continues to outpace inflation and wage growth, according to a new survey released Wednesday by the Kaiser Family Foundation and Health Research and Educational Trust, the Washington Post reports (Crenshaw, Washington Post, 9/15). For the study, researchers surveyed 2,995 employers between January and May; 2,013 employers responded to the full survey, while an additional 982 employers answered one question about whether or not they offered health insurance to workers (Kaiser Family Foundation/HRET joint release, 9/14).
The decline in employer-sponsored health insurance comes mostly from small businesses, with 68% of employers with three to 199 workers offering coverage in 2000, compared with 59% in 2005, the survey found (Rovner, CongressDaily, 9/14). For the smallest of firms, those with 3-9 employees, 47% now offer health benefits (Kaiser Family Foundation/HRET joint release, 9/14).
Premiums in 2005 increased an average of 9.2%, compared with 11.2% in 2004, marking the second consecutive year of a slower rise in premiums, according to the survey (Higgins, Washington Times, 9/15). The 2005 premium increase also ended four consecutive years of double-digit increases (Fuhrmans, Wall Street Journal, 9/15).
However, the increase still is more than three times that of workers' wage growth (2.7%), and 2.5 times the rate of inflation (3.5%), the survey found (Washington Times, 9/15). Premiums have increased 73% since 2000, while wages have increased by 15%, the Los Angeles Times reports (Vrana, Los Angeles Times, 9/15).
On average, health insurance premiums for family coverage in 2005 were $10,880, with the employer paying $8,167 and the worker paying $2,713, the study found. For single worker coverage, the average premium cost $4,024, with $3,413 paid by the employer and $610 paid by the employee, according to the report (Washington Post, 9/15).
The survey also found that 20% of employers that offer health insurance provide a high-deductible plan option -- those with at least a $1,000 deductible for single coverage and a minimum $2,000 deductible for family coverage (Colliver, San Francisco Chronicle, 9/15). Thirty-three percent of businesses with 5,000 or more workers offered high-deductible plans, making them significantly more likely to offer the plans compared with smaller companies, according to the survey.
In addition, 19.5% of employers offering high-deductible plans, or 3.9% of all employers surveyed, also contribute to a health reimbursement arrangement or offer a plan that allows a worker to establish a health savings account (Kaiser Family Foundation/HRET joint release, 9/14). The survey estimates that this year about 2.3% of nonfederal workers, or 1.6 million people, are enrolled in a high-deductible plan with an HRA, and about 1.2% of workers, or 810,000 people, are enrolled in a high-deductible plan eligible for use with an HSA (Stafford, Kansas City Star, 9/14).
The survey also found little confidence among employers in strategies to control rising health care costs. According to the survey:
- 16% of employers said consumer-driven health plans are "very" effective in lowering health care costs, while 45% said they are "somewhat" effective;
- 12% of employers said increased employer cost-sharing is "very" effective in lowering health care costs, and 46% said it is "somewhat" effective;
- 14% of employers said disease management programs are "very" effective at controlling costs, and 38% said they are "somewhat" effective; and
- 7% of employers said they believe tighter managed care networks are "very" effective at controlling health care costs, and 37% said they are "somewhat" effective (Kaiser Family Foundation/HRET joint release, 9/14).
The survey also found:
- 73% of businesses not offering coverage said high premiums were "very important" in their decision not to offer insurance to employees (Salganik, Baltimore Sun, 9/15). Fifty-two percent said their company's small size and 33% said workers' access to other coverage led them to not offer coverage (Kaiser Family Foundation/HRET joint release, 9/14);
- 61% of employees in 2005 were enrolled in a PPO plan, compared to 55% in 2004, while HMO enrollment declined from 25% in 2004 to 21% in 2005 (Washington Times, 9/15);
- 40% of companies with 200 or more employees said they are "very likely" to shift more health care costs to workers in 2006, while 15% of smaller companies said they planned to do so (Sahadi, CNN/Money.com, 9/15);
While the year-to-year changes in proportion of employers offering health coverage might be small, the survey reflects "a slow but perceptible deterioration of our employer-based system of health care," Kaiser Family Foundation President and CEO Drew Altman said (CongressDaily, 9/14). He added, "It is low-wage workers who are being hurt the most by the steady drip, drip, drip of coverage draining out of the employer-based health insurance system" (Wall Street Journal, 9/15).
Mary Pittman, president of HRET, said, "When we reach a certain tipping point, it affects how people and families respond to choosing to be insured" (CQ HealthBeat, 9/14).
According to report co-author Gary Claxton, a Kaiser Family Foundation vice president and director of its Health Care Marketplace Project, it is too early to tell if the decline in premiums will continue. Claxton said short-term market factors -- such as consolidation, which has led to increased competition among insurers -- could influence premiums (AP/Long Island Newsday, 9/14).
Study co-author Jon Gabel, formerly at HRET and presently vice president of the Center for Studying Health System Change, said prescription drug price increases have slowed because of fewer new blockbuster drugs. He added that premium increases have slowed somewhat "[b]ut there's little confidence out there that we have an answer to health care cost growth. In the mid-1990s, premium hikes dropped to less than 1%, and we're still far away from that right now" (Pugh, Philadelphia Inquirer, 9/15). Even if the rate of premiums continues to fall, "it won't likely come down close to the rate of wage growth," Claxton said (AP/Long Island Newsday, 9/15).
Altman said, "We shouldn't expect anything other than for the rate of health premiums to greatly outpace the growth of wages and the growth of the general economy" (Krasner, Boston Globe, 9/15).
Altman said that proposed solutions to stemming health cost growth -- including high-deductible policies, disease management programs and increased use of computer technology to streamline medical records -- "could have some impact at the margin, but I don't expect any to have a dramatic impact on the rate of increase overall" (Appleby, USA Today, 9/15).
In addition, Claxton said that while "[c]onsumer-driven health plans are proving attractive to some, ... it's too early to know whether they'll have a meaningful effect on the health care system" (Boston Globe, 9/15).
Kate Sullivan Hare, executive director of health care policy for the U.S. Chamber of Commerce, said the organization wants Congress to support increased use of health information technology as a method of controlling health costs.
Gerry Shea, assistant to the president for governmental affairs at the AFL-CIO, said Congress needs to "take the pressure off employers" by offering reinsurance programs to share catastrophic costs and increasing oversight to reduce "poor quality and unsafe practices" that drive up costs (Baltimore Sun, 9/15).
The survey is available online.
NPR's "All Things Considered" on Wednesday reported on the survey. The segment includes comments from Altman; Heather Dumas, benefits supervisor at Ferrellgas; and Karen Ignagni, president and CEO of America's Health Insurance Plans (Silberner, "All Things Considered," NPR, 9/14). The complete segment is available online in RealPlayer.