SEPTEMBER 14, 2005 -- The cost of health insurance premiums is rising faster than both wages and inflation, according to results of the Annual Employer Health Benefits Survey released Wednesday by the Kaiser Family Foundation.

And as health care costs have risen over the past five years, the number of businesses offering health insurance to their employees has dropped, the study indicates.

The study found that insurance premiums increased 9.2 percent since 2004. While that is lower than the previous year's growth, it is about three times the growth in workers' wages and more than two times the rate of inflation, the study found.

Annual premiums for family coverage were $10,880 in 2005, which is more than earnings for a full-time minimum-wage worker, which is $10,712, according to the survey.

"When we reach a certain tipping point, it affects how people and families respond to choosing to be insured," said Mary Pittman, president of Health Research and Educational Trust, which cosponsored the survey.

About 60 percent of businesses offered coverage to their workers in 2005, a drop from 69 percent in 2000, the results indicate. Most of those who chose to drop coverage were smaller businesses, meaning low-wage workers are bearing the brunt of increasing health care costs; they are either choosing to stay uninsured or are finding coverage through Medicaid.

The survey also indicates a new phenomena: more employers are choosing to offer their employees consumer-driven health plans that have high deductibles. But few workers have enrolled in these plans.

More employers also are offering employees accounts to pay for part of their medical expenses directly—such as health reimbursement arrangements, a health insurance plan where businesses reimburse employees for medical expenses, or health savings accounts. And more businesses are offering disease management programs that provide coverage for diabetes, asthma, and hypertension as part of the health plans.

Meanwhile, the study found that less-restrictive insurance plans such as preferred provider organizations are becoming more common than health maintenance organizations, which generally cost less.

The survey evaluated 2,013 businesses with three or more employees.

Following the release of the report, Sen. Olympia J. Snowe, R-Maine, chairwoman of the Senate Committee on Small Business and Entrepreneurship, called for the Senate to pass her legislation (S 406) that would allow small businesses to pool together to provide health insurance to their employees. But that bill has not moved so far in the Senate and is not expected to pass. The House passed a companion bill (HR 525) on July 26.