By Mary Agnes Carey, CQ HealthBeat Associate Editor
September 11, 2007 – Health insurance premiums for employer-sponsored coverage rose an average of 6.1 percent this year, the smallest rate of increase since 1999 but still higher than increases in inflation or workers' wages, according to a survey released Tuesday by the Kaiser Family Foundation and the Health Research and Educational Trust.
The average premium for family coverage in 2007 is $12,106, with workers paying on average $3,281 for a family policy and employers paying the rest. For single workers, the average total premium cost is $4,479, with workers contributing $694. Since 2001, researchers found, health insurance premiums have increased 78 percent while wages have gone up 19 percent and inflation has increased 17 percent.
"Health insurance is becoming increasingly unaffordable for many Americans and businesses," said Drew E. Altman, president and CEO of the Kaiser Family Foundation. While the 6.1 increase for 2007 is a "notable moderation … it just doesn't feel like moderation at all when premiums continue to increase faster than inflation year after year," he said.
Anxiety over rising health care costs is helping to make health care a top issue in the 2008 presidential campaigns. In a Kaiser health tracking poll conducted in June, 75 percent of voters said they were either very worried or somewhat worried about having to pay more for their health care, outranking fears of being the victim of a terrorist attack (54 percent) or being the victim of a violent crime (49 percent).
While the Bush Administration and proponents of consumer-driven health plans, one option an employer can offer for coverage, say such plans will help to control health care spending, the Kaiser survey found that 3.8 million workers were enrolled in such plans in 2007, up from 2.7 million in 2006. Few employers who do not already offer such plans said they planned to do so next year, and only 15 percent of small firms and 17 percent of large firms said the plans were "very effective" at keeping down costs.
The low rate of acceptance may be due to the fact that consumer-driven health plans are relatively new and are a complicated product to explain to employees, said survey co-author Gary Claxton, a Kaiser vice president and director of the foundation's Health Care Marketplace Project. In addition, moderation in premium growth has not pushed employers to make major changes to their health insurance plans, he said. The plans feature a high deductible and a tax-preferred savings accounts, from which employees can withdraw money to pay for out of pocket medical expenses.
The ninth annual survey, conducted between January and May, included 3,078 randomly selected, non-federal public and private firms with three or more employees. Nearly all large businesses with at least 200 workers offer health benefits to their workers this year, but fewer than half of the smallest firms with three to nine workers provide health care insurance to their workers.
While the number of firms offering health care benefits to their workers remained statistically unchanged from last year's rate of 61 percent, the number is lower than the 69 percent of employers who offered coverage in 2000. "We aren't falling off a cliff," said Jon Gabel, a co-author of the study and senior fellow at the National Opinion Research Center at the University of Chicago. "We are witnessing a slow but certain long-term erosion of our employer-based system."
Workers are certainly expected to pay more for their benefits in 2008. The Kaiser survey found that 21 percent of firms were very likely to increase the amount that employees pay for their health insurance, while 11 percent said they would increase the amount workers paid for prescription drugs and 12 percent planned to increase plan deductibles.
