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Health Insurance Cost Rising More Slowly
Sept. 14, 2005 (Washington) -- The cost of health insurance premiums rose in 2005, but at a slower rate than the year before. Despite that trend, analysts still warn that fewer and fewer employers are offering coverage because of increasing prices.
Average premiums for employer-sponsored coverage rose 9.2% between 2004 and 2005 after going up 11.2% the year before and 13.9% in 2003. A worker's average annual share for a typical family of four is now $2,713 per year, according to data released Wednesday by the Henry J. Kaiser Family Foundation.
Rising costs continue to severely stress both workers and their employers, who usually share medical coverage costs that continue to grow out of reach, according to the report.
About two-thirds of Americans get their health insurance through an employer. The U.S. Census Bureau reported last month that 45.8 million Americans now lack health insurance; most of those uninsured live in families with at least one full-time worker.
Wednesday's data show a primary driver behind that trend: Costs rose nearly three times as fast as workers' wages, causing a dynamic that continues to eat away at the ability of full-time employees to secure medical care.
At the same time, other costs shouldered exclusively by employees -- including deductibles and co-payments -- continue to go up as firms struggle to control costs.
"It's hard to see why there would be any end in sight," Kaiser Foundation Vice President Gary Claxton, one of the study's authors, tells WebMD.
Costs Hitting Small Businesses
Rising costs are being felt most at small firms, which are seeing a steady erosion in their ability to afford medical coverage for workers. While nearly all large companies still offer health insurance to employees, less than 60% of companies with less than 200 workers now provide coverage.
Employers typically pay about 70% of worker health premiums, which in 2005 averaged $10,880 per year. Sixty percent of all American businesses offered health coverage for workers in 2005, down a full 5% from 2000. Most that don't offer coverage cite high costs as the reason, researchers said.
Lawmakers in Washington have done little to address rising health care costs and the resulting erosion in insurance despite years of debate. A White House proposal that offers families $1,000 in tax credits to put toward insurance has been criticized by some Republicans and Democrats who argue that the money will do little to help buy insurance that now costs nearly $11,000 annually for a family of four.
Bush has also strongly backed the use of high-deductible insurance plans, which some workers can now pay for by using tax-free health savings accounts. The plans are growing in popularity, with one-fifth of large companies now offering them as an option, according to the report. Still, less than 1 million people use the accounts.
"I can't see anything in the marketplace that would have a meaningful effect on rising costs," Claxton says.
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