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Survey: Health Benefit Costs Still Growing Faster Than Inflation, Salary Increases

By Rebecca Adams, CQ Staff

With health care costs near the top of personal economic issues for many families, a new survey is not likely to provide much comfort. Almost half of employers reported that it is "very" or "somewhat likely" they will increase the amount that employees pay for health insurance in the coming year, according to the survey, released by the nonpartisan Kaiser Family Foundation.

Twenty-one percent of employers found it "very" likely that they would ask workers to share more of the burden for health insurance, while 28 percent found it "somewhat" likely.

The positive news in the report was that health insurance premiums rose 7.7 percent from the spring of 2005 to 2006, a lower rate than in previous years.

Karen Ignagni, president and chief executive officer of America's Health Insurance Plans, said in a statement on Tuesday, "Our community has reinvented cost-containment strategies and is deploying a new generation of tools and techniques to stretch health care dollars and mitigate the burden of rising medical costs."

However, the increase still outpaced the growth of workers' earnings.

"Nobody should be celebrating too wildly," said Drew Altman, Kaiser Family Foundation president and chief executive officer, adding that families "are still feeling the pain" of health care costs that have risen steadily in recent years.

Health insurance premiums for workers and their employers have skyrocketed by 87 percent since 2000, the survey found, while workers' earnings have risen by 20 percent over the same time period. That gap is leading consumers to rate health care costs as one of their top economic concerns in polls.

However, the pocketbook concerns are not translating into political liabilities for incumbents this year. Concerns about national security, Iraq, and economic issues in general are weighing more heavily on voters' minds.

Smaller firms are feeling the strain of higher health care costs more than large corporations. Premiums rose by 8.8 percent at small firms but 7.0 percent at large firms, the survey found.

Interest in consumer-driven health plans, a topic of much discussion among Washington policymakers because its growth is a priority for President Bush, may be slightly, but not significantly, higher than last year. Currently, about 4 percent of workers get their care through consumer-driven plans, such as health reimbursement accounts and health savings accounts. In 2005, 2.4 million Americans received their care through consumer-driven health plans, compared with 2.7 million in 2006.

A smaller percentage of workers are getting benefits from their employers, which bears out data released by the U.S. Census Bureau earlier this year. The proportion of workers receiving benefits from their employees has fallen from 65 percent in 2001 to 59 percent in 2006.

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