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Workers Paying More for Health Insurance

Employers Share Costs of Rising Premiums

WebMD Health News

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Sept. 9, 2002 -- You may be paying more than ever for health insurance, but you're actually getting less, according to a new survey. Researchers say rising healthcare costs and a fledgling economy have prompted the biggest increase in health insurance premiums in 12 years. And employers are passing along those added costs to their workers.

The survey shows that premiums paid by employers have risen 12.7% from spring 2001 to spring 2002 -- now totaling $3,060 for single coverage and $7,954 for family coverage. Meanwhile, the amount an employee pays for health insurance has grown by 27% to an average of $454 per year, and the employee-paid share for family coverage has gone up 16% to an average of $2,084 per year.

The survey also shows that for the first time in four years, more workers are now receiving reduced rather than increased benefits. Seventeen percent of covered workers are at firms that say they now offer employees a lower level of health benefits than last year.

Researchers say there are likely more cutbacks and cost increases ahead. More than three-fourths of the companies surveyed said they are very or somewhat likely to raise employee premiums in the next year, and 53% of firms named health insurance as the "greatest cost concern for the company."

The Kaiser Family Foundation and the Health Research and Educational Trust conducted their annual survey of employer benefit plans between January and May 2002. It included over 3,200 randomly selected public and private firms that have between three and more than 300,000 employees.

Other survey findings include:

  • Deductibles for in-network PPO health insurance plans (the predominant type of plan) rose by 37% from $201 in 2001 to $276 in 2002.
  • More than half (57%) of the firms now have prescription coverage that uses three-tiered cost plans for generic drugs, brand name drugs without generic substitutes ("preferred drugs"), and brand name drugs with generic substitutes ("non-preferred drugs"), up from 29% last year.
  • Nine percent of large firms with 200 or more workers have eliminated retiree benefits for new hires or existing employees in the last two years.

The complete report appears in the September/October issue of the journal Health Affairs.

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