Health Insurance Hikes Slowing
WASHINGTON, D.C. — The annual survey of employer health benefits recently released by the Henry J. Kaiser Family Foundation and Health Research and Education Trust (HRET) offers some hopeful news for businesses that provide health coverage to their employees. The cost of providing coverage has risen, but it has done so at a lower rate than in recent years. The survey found the average increase among companies of all sizes was 9.2 percent. That may seem a sizable figure, but it is dwarfed by the double-digit increases companies have faced for the past several years.
That 9.2-percent increase means that businesses are paying an average of $10,880 to cover a family of four, up from $9,879 in 2004. Employees covered an average of 26 percent of the 2005 total, or $2,713. Although the overall costs are increasing, employees are paying a smaller percentage. The average employee contribution in 1988, for example, was 29 percent. Nonetheless, the survey also showed that the increase in health-care costs was more than double the percentage increase in either inflation or workers’ earnings. In other words, health coverage continues to grow more unaffordable for the average American worker.
Compounding that statistic is the fact that fewer companies are offering coverage to their employees. In 2005, 60 percent of companies are offering health benefits — 13 percent fewer than in 2000. The size of the employer greatly affects the likelihood of its offering health benefits. Among companies with 200 or more employees, 98 percent offer coverage. In companies with fewer than 200 employees, only 59 percent offer health benefits. In the smallest companies (three to nine employees), only 47 percent offer coverage.
Among the firms that do not offer coverage, 73 percent said the reason is that premiums are too high. Fifty-two percent said their companies are too small to offer benefits.
One remarkable statistic in the survey has to do with the prevalence of high-deductible health plans (HDHPs) — coverage with a minimum deductible of $1,000 for an individual or $2,000 for a family. The percentage of companies offering these plans has tripled since 2003. Although these plans are not new, they have come into favor recently because the increasingly popular Health Savings Account (HSA) combines an HDHP with a financial instrument akin to an Individual Retirement Account. Currently only 20 percent of the companies surveyed offer an HDHP, whether paired with an HSA or otherwise. But that number may double by next year, as an additional 20 percent said it is “very likely” or “somewhat likely” that they will add such a plan in 2006.