Health insurance cost outpaces inflation

BY TAMI LUHBY

STAFF WRITER



September 15, 2005





Health insurance is becoming ever more unaffordable for workers.



Premiums have soared 73 percent since 2000, far outpacing the rate of inflation and wage growth, which grew at 3.5 percent and 2.7 percent respectively, according to the 2005 Annual Employer Health Benefits Survey, released yesterday.



Meanwhile, more companies are shifting costs to employees - requiring they shell out more for office visits, deductibles and drugs - and fewer are offering insurance coverage at all.



"Health insurance is becoming more expensive for the average person," said Gary Claxton, co-author of the survey, which was sponsored by the Kaiser Family Foundation and Health Research and Educational Trust.



One bit of good news is that the growth in premiums is slowing, Claxton said.



For 2005, the average increase was only 9.2 percent, the first single-digit hike in five years. This is in part because insurance providers are once again competing for market share, and drug and hospital care costs have stopped rising.



This year, workers are paying an average of $51 a month for single coverage, or 16 percent of the premium, and $226 a month for family benefits, or 26 percent of the premium. This is up from $27 and $129, respectively, in 1999.



The share of premium coverage, however, hasn't changed much in the past five years, with companies still shouldering most of the costs. The difference is that they are making employees pay more out-of-pocket.



Annual deductibles and co-payments for office visits and prescription drugs have jumped in recent years, the Kaiser study found. A growing number are paying $20 and $25 per office visit instead of $10 or $15, for instance.



"If workers are going to use the services, it's going to cost them more money," said Paul Fronstin, a health insurance expert at the Employee Benefit Research Institute.



At Adelphi University, officials have struggled to keep health insurance affordable despite an 88 percent increase in premiums since 2000.



They are trying to make workers more aware of costs - so that they will ask their doctors whether they really need this test or that name-brand drug.



Also, the university is rolling out a wellness program on Jan. 1 that will encourage workers to adopt more healthy lifestyles.



"We're trying to make employees more conscious of what they are buying," said Tim Burton, the Garden City university's chief financial officer.



Sparing premiums



Health insurance costs have skyrocketed in recent years, far faster than the rate of inflation



Annual percentage premium increase / Average annual rate of inflation



2000 8.2% / 3.4%



2001 10.9 / 2.8



2002 12.9 / 1.6



2003 13.9 / 2.3



2004 11.2 / 2.7



2005 9.2 / 3.2