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Survey Finds Health Plan Premiums, Deductibles Rising

By Mary Agnes Carey, CQ HealthBeat Associate Editor

September 24, 2008 -- The cost of employer-sponsored health insurance averaged $12,680 this year for family coverage and $4,704 for individuals, reflecting a five percent increase in premiums, according to an analysis released Wednesday. Although the premium hike was relatively modest, many workers faced rising deductibles, with 18 percent of all covered workers paying annual deductibles of at least $1,000.

The 18 percent figure was up from 12 percent in 2007, according to the survey, a joint effort of the Kaiser Family Foundation and the Health Research and Education Trust. Premiums have more than doubled since 1999 while during the same nine-year period workers' wages increased 34 percent and general inflation rose 29 percent.

On average, employees paid $3,354 for premiums for family coverage in 2008 while individuals paid $721. Those costs are expected to continue to increase next year, with 14 percent of firms saying they are "very likely" to raise workers' premium contributions and 12 percent "very likely" to raise deductibles.

For workers, "paying for health care and health care insurance is one of their top economic problems today," Kaiser Family Foundation President and CEO Drew Altman said at a Washington, D.C. news conference. Firms, in particular smaller ones, may also be offering less generous coverage to reduce costs. "Less comprehensive, skimpier insurance is cheaper but it does shift more of the burden to working people," he said.

The survey also found that more firms—especially with those with fewer than 200 workers—are offering "consumer-directed" health plans such as a health savings account (HSA) or a health reimbursement arrangement (HRA) to their employees, with six of 10 companies offering the plans because they cost less, and more than four of 10 saying the plans have helped lower health care costs. An estimated 5.5 million covered workers are enrolled in these plans, the survey found.

Among small firms, enrollment in consumer-directed plans is 13 percent this year compared with 8 percent a year ago. In firms with at least 200 employees, 5 percent of workers are enrolled in such plans, which feature high deductibles. The average annual deductible for single coverage is $2,010 for an HSA-qualified plan and $1,552 for an HRAs.

Karen Ignagni, president and CEO of America's Health Insurance Plans, said in a statement that "the slowing rate of growth in health insurance premiums shows we are moving in the right direction, but much more needs to be done to make health care coverage more affordable for consumers and employers."

House Ways and Means Health Subcommittee Chairman Pete Stark, D-Calif., said the report should push Congress to overhaul the nation's health care system. "Unless we enact significant reforms, people will continue to fall through the cracks of insurance company rules, employers will continue to drop coverage, and out-of-pocket costs will continue to rise faster than wages. Until we have universal coverage, these cost shifts away from insurers to consumers will continue."

Altman predicted Wednesday that the already difficult task of passing comprehensive health care legislation would be complicated by the expected passage of a $700 billion plan to rescue the nation's financial system. "Recent developments have made it tougher if not impossible," he said. "It might ... take elected officials off the hook to do something sweeping and comprehensive."

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