Health insurance costs rise 7.7%, twice the rate of inflation
Health insurance costs rise 7.7%, twice the rate of inflation
By Julie Appleby, USA TODAY
Workers and employers won't find much comfort in the smallest increase in health insurance costs since 1999. The 7.7% increase this year is still more than twice the rate of inflation.
And those rising costs have so far failed to boost the percentage of employers offering what are touted by some, including President Bush, as an answer to health care inflation: high- deductible insurance policies coupled with savings accounts.
Despite being the biggest buzz among benefit consultants, the Kaiser Family Foundation says only 7% of employers offered such policies this year, unchanged from 2005. The results come from the non-profit foundation's annual employer survey, released Tuesday.
"This shows that the debate in the media and in Washington health policy circles is way out in front of the reality," says Drew Altman, president of the non-profit research group in Menlo Park, Calif.
Other results from the survey:
• Among all types of health insurance, what employers paid rose 7.7% this year, smallest increase since 1999, but still more than twice overall inflation.
• The most common type of insurance, a preferred provider organization plan, averaged $11,765 for a family and $4,385 for single employees.
• Employers did not substantially raise deductibles, premiums or co-payments that their employees pay. The average percentage of the premium paid by workers was 27% for family coverage and 16% for single plans.
Still, workers are paying more because overall premiums rose.
"Working people are still feeling the pain," says Altman, who says on average, what workers pay toward premiums has risen 84% since 2000, while wages are up 20% and inflation 18%.
The total premium increase is up 87% since 2000.
While high-deductible policies have always been sold, the new twist in the market came when Congress in late 2003 allowed certain policies to be coupled with tax-free "health savings accounts." Money in these accounts not used for deductibles and other medical care can roll over and be used in future years for medical care. That's a change from the flexible spending accounts many companies offer.
Proponents, including President Bush, say the policies will get patients to act more like savvy consumers and shop for medical care based on cost and quality. Critics, including the Commonwealth Fund, say such policies benefit mainly the healthy and wealthy and will discourage preventive medical care.
The policies have annual deductibles of at least $1,050 for singles and $2,100 for families. Another type of account, a health reimbursement account, is similar, except the worker generally cannot take any money left in the account with him or her when leaving the company.
The Kaiser survey found that the average annual deductible for the reimbursement accounts is $1,442 for individuals or $2,985 for families. For health savings account plans offered by employers, the average annual deductible was $2,011 for singles and $4,008 for families. Sixty three percent of employers contribute something toward the savings accounts.
While high-deductible accounts have lower premiums than other types of insurance, the Kaiser survey found that most employers don't save any money compared with other types of insurance, once employer contributions to those savings accounts are added to premium costs.
Asset Resources, a 10-employee debt collection firm in Minneapolis, switched to a high-deductible plan after several years of 17% increases in health insurance premiums.
"The broker said we might be able to cut some costs for you and afford some employees an opportunity from a tax point of view," says Mark Wallerius, vice president.
"It seemed a win-win at the time."
So the company switched from insurance with a $500 annual deductible, a $15 co-pay at the doctor's office and a 20% coinsurance charge for hospital services to one with an annual deductible of $1,250. Some preventive care is fully covered at the doctor's office, but employees had to pay the full cost of other visits until they reached the deductible.
"They were pretty disgruntled," says Wallerius, who said the employees voted to go back to a lower-deductible plan this year.
Posted 9/26/2006 10:43 AM ET
Copyright 2006 USA TODAY, a division of Gannett Co. Inc.
By Julie Appleby, USA TODAY
Workers and employers won't find much comfort in the smallest increase in health insurance costs since 1999. The 7.7% increase this year is still more than twice the rate of inflation.
And those rising costs have so far failed to boost the percentage of employers offering what are touted by some, including President Bush, as an answer to health care inflation: high- deductible insurance policies coupled with savings accounts.
Despite being the biggest buzz among benefit consultants, the Kaiser Family Foundation says only 7% of employers offered such policies this year, unchanged from 2005. The results come from the non-profit foundation's annual employer survey, released Tuesday.
"This shows that the debate in the media and in Washington health policy circles is way out in front of the reality," says Drew Altman, president of the non-profit research group in Menlo Park, Calif.
Other results from the survey:
• Among all types of health insurance, what employers paid rose 7.7% this year, smallest increase since 1999, but still more than twice overall inflation.
• The most common type of insurance, a preferred provider organization plan, averaged $11,765 for a family and $4,385 for single employees.
• Employers did not substantially raise deductibles, premiums or co-payments that their employees pay. The average percentage of the premium paid by workers was 27% for family coverage and 16% for single plans.
Still, workers are paying more because overall premiums rose.
"Working people are still feeling the pain," says Altman, who says on average, what workers pay toward premiums has risen 84% since 2000, while wages are up 20% and inflation 18%.
The total premium increase is up 87% since 2000.
While high-deductible policies have always been sold, the new twist in the market came when Congress in late 2003 allowed certain policies to be coupled with tax-free "health savings accounts." Money in these accounts not used for deductibles and other medical care can roll over and be used in future years for medical care. That's a change from the flexible spending accounts many companies offer.
Proponents, including President Bush, say the policies will get patients to act more like savvy consumers and shop for medical care based on cost and quality. Critics, including the Commonwealth Fund, say such policies benefit mainly the healthy and wealthy and will discourage preventive medical care.
The policies have annual deductibles of at least $1,050 for singles and $2,100 for families. Another type of account, a health reimbursement account, is similar, except the worker generally cannot take any money left in the account with him or her when leaving the company.
The Kaiser survey found that the average annual deductible for the reimbursement accounts is $1,442 for individuals or $2,985 for families. For health savings account plans offered by employers, the average annual deductible was $2,011 for singles and $4,008 for families. Sixty three percent of employers contribute something toward the savings accounts.
While high-deductible accounts have lower premiums than other types of insurance, the Kaiser survey found that most employers don't save any money compared with other types of insurance, once employer contributions to those savings accounts are added to premium costs.
Asset Resources, a 10-employee debt collection firm in Minneapolis, switched to a high-deductible plan after several years of 17% increases in health insurance premiums.
"The broker said we might be able to cut some costs for you and afford some employees an opportunity from a tax point of view," says Mark Wallerius, vice president.
"It seemed a win-win at the time."
So the company switched from insurance with a $500 annual deductible, a $15 co-pay at the doctor's office and a 20% coinsurance charge for hospital services to one with an annual deductible of $1,250. Some preventive care is fully covered at the doctor's office, but employees had to pay the full cost of other visits until they reached the deductible.
"They were pretty disgruntled," says Wallerius, who said the employees voted to go back to a lower-deductible plan this year.
Posted 9/26/2006 10:43 AM ET
Copyright 2006 USA TODAY, a division of Gannett Co. Inc.
posted by Walking Contradiction at 9/27/2006 11:20:00 AM
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