Kaiser study shows health-care premiums rise 11.2% in 2004

Thursday, September 09, 2004



St. Louis Business Journal

Premiums for employer-sponsored health plans rose an average of 11.2 percent in 2004, the fourth consecutive year of double-digit growth, according to a study released Thursday by the Washington, D.C.-based Kaiser Family Foundation and Health Research and Educational Trust.

Premiums reached an average of $9,950 a year for family coverage, or $829 a month, and $3,695 for single coverage, or $308 a month, the study showed. For preferred provider organizations, or PPOs, family premiums rose to $10,217 a year, or $851 a month.

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The study showed that premiums for employer-sponsored health insurance increased about five times the rate of inflation, which was 2.3 percent, and workers' earnings, which rose 2.2 percent.

Drew Altman, president and chief executive of the Kaiser Family Foundation, said the cost of family health insurance is quickly approaching the gross earnings of a full-time minimum wage worker. "If these trends continue, workers and employers will find it increasingly difficult to pay for family health coverage and every year the share of Americans who have employer-sponsored health coverage will fall," he said, in a statement.

Jon Gabel, vice president for health systems studies at the Health Research and Educational Trust, said employee contributions have also increased since 2001, rising 49 percent for family coverage and 57 percent for single coverage, while workers' wages have increased only 12 percent.

In 2004, workers contributed an average of $558 of the $3,695 annual premium cost of single coverage and $2,661 of the $9,950 annual premium cost of family coverage, up 10 percent from 2003.

PPOs are the most common form of coverage, with 55 percent of employees in a PPO, the study showed. Health maintenance organizations, or HMOs, cover about 25 percent of workers, while conventional plans cover just 5 percent of workers.