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Employers See Health Premiums Rise 13.9%

September 10, 2003|Debora Vrana | Times Staff Writer

U.S. employers' health insurance premiums climbed an average of 13.9% this year, the most since 1990, in the third straight year of double-digit percentage increases, according to a survey released Tuesday.

But the survey found some relief for workers. Companies this year didn't shift as much of the increase in premium costs to employees as they did in 2002. Nor did many employers reduce the level of the health benefits or drop coverage for their workers, as had been feared.

On average, worker contributions for health insurance rose 8% for single coverage, to $42 a month, and 13% for family coverage, to $201, according to the Kaiser Family Foundation and the Health Research and Educational Trust.

Many employers, especially larger ones, reported that they were likely to pass on more of the costs of health benefits to workers next year. And more than half of the 1,856 private and public employers surveyed said they probably would increase the amount their employees will have pay for prescription drugs next year.

"People have become used to the idea that health-care costs continue to go up very rapidly, faster than their wages and faster than inflation," said Gary Claxton, author of the study and a vice president at the Menlo Park, Calif.-based Kaiser Family Foundation, an independent research group that is not affiliated with the managed-care provider Kaiser Permanente.

"All we can say is that they are going to keep going up, period," Claxton said. "We don't have a lot to suggest what can be done about it."

As in the past, the jump in health premiums was driven mostly by bigger insurance claims stemming from higher prices for hospital services and prescription drugs.

But the report also noted another factor in the rapid run-up in health insurance premiums: "insurers' efforts to emphasize profitability in their pricing" -- in other words, to make more money.

The average cost of employer-provided health insurance this year was $3,383 for single coverage, with the employee picking up $508 of the tab. For a health plan that includes the employee and his or her dependents, the yearly premium averaged $9,068, of which $2,412 was paid by the employee.

Overall, health insurance costs for an employer increased 16% for providing coverage for a single employee, and those costs rose 27% for covering an employee and family, the survey found.

Workers with families increasingly are facing steep costs as companies try to find ways to make families shoulder more of the burden of treating children and spouses.

Some are charging more to cover larger families than smaller ones, and others are refusing to cover working spouses who could get health care at their own companies.

Only 15% of small companies fully subsidize family medical premiums, according to the survey, down from 27% just two years ago.

As businesses seek ways to lower their costs, they increasingly are looking for alternatives to their health plans. About 62% of employers surveyed said they had shopped for a different arrangement, and about one-third of them said they had changed health-care providers this year.

Employers soon could be facing health-care changes that are beyond their control.

Various pieces of legislation are pending nationwide. In California, Senate Bill 2, which is likely to be taken up by the Legislature this week, would require many employers in the state to provide health insurance or pay into a state fund that would provide coverage.

This year's 13.9% increase in premiums followed a jump of 13% in 2002.

Although both are less than the average 18% hike recorded in 1989 -- when many employers began to embrace managed care -- the latest increase far outpaced the overall rate of inflation (2.2%) and wage gains for most workers (3.1%).

If current trends persist, some researchers predict, the number of uninsured Americans will increase. In 2000, the U.S. Census estimated that 39 million Americans were without health coverage.

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