Health insurance is twice inflation rate - East Valley Tribune: Business

Health insurance is twice inflation rate

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Posted: Tuesday, September 26, 2006 11:09 am | Updated: 3:22 pm, Fri Oct 7, 2011.

WASHINGTON - Workers won't find much comfort in the smallest increase in health insurance premiums since 1999. The 7.7 percent increase this year was still more than twice the rate of inflation.

"To working people and business owners, a reduction in an already very high rate of increase just means you're still paying more," said Dr. Drew Altman, president and chief executive officer of the Kaiser Family Foundation, a health care research organization that annually tracks the cost of health insurance.

Altman said the rising gap between premium growth and wages is particularly startling when one takes a longer look back. Since 2000, health insurance premiums have gone up 87 percent; wages 20 percent.

"Yes, the rate of increase is down, but I don't think anybody is celebrating," Altman said of this year's numbers.

The Kaiser Family Foundation's findings are based on a telephone survey of 3,159 randomly selected private and public employers. More that 155 million Americans get their health insurance through their jobs.

Employers on average pick up 84 percent of the cost for individuals and 73 percent for families.

The rising cost of health insurance is one reason that employers are finding it an increasingly difficult benefit to give their workers. Since 2000, the percentage of firms offering health benefits has fallen to 61 percent from 69 percent. This year, however, the deterioration appeared to stop, particularly among small businesses.

Yet, Altman said the slight improvement noted by the Kaiser study was statistically insignificant.

"It's worth observing that this survey comes out on the heels of the Census report showing that we added 1.3 million people to the ranks of the uninsured in 2005," he said. "The long-term trend is very clear, and it's the slow unraveling of coverage in the employment-based system, especially among smaller employers."

Overall, the total cost of health insurance for individuals now averages $4,242 a year. For families, the costs average a whopping $11,480.

In this year's survey, Kaiser also looked at how many firms offer high-deductible insurance plans and health savings accounts. Such plans are being pushed aggressively by the Bush administration. They have lower monthly premiums, but that's because they require consumers to pay more of the initial cost of their health care.

Kaiser estimates about 2.7 million workers are enrolled in high-deductible plans with a savings account. Employers or employees get a tax break when they put money in the accounts.

Altman said what struck him about that number is that the intensity of the debate in Washington over health savings accounts is completely out of sync with the reality of the marketplace.

"Just a modest number of employers tell us they plan to move to these arrangements next year. It's a trickle, not a tidal wave," he said. "Secondly, employers don't have a great deal of confidence that any of the weapons at their disposal to control health care costs will produce big results."

Employers and their workers probably won't find much relief next year either, according to another survey of 167 large corporations that was conducted by Towers Perrin, a consulting firm. The companies expect their health care costs to rise by about 6 percent next year, which is well above the anticipated rate of overall inflation.

"The issue of affordability for both businesses and employees could become considerably more challenging in the years ahead as baby boomers age and chronic diseases such as diabetes and obesity proliferate," the consulting firm said.

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