Health-insurance costs up 78 percent in 6 years

WASHINGTON — The increasing cost of health insurance is putting coverage out of reach for many small to midsize companies and their workers, even though the rise in premiums this year was the lowest increase since 1999, according to a national survey of employers.

The 6.1 percent increase marked the fourth straight year premium growth has slowed for employer-sponsored coverage, according to the annual survey by the Henry J. Kaiser Family Foundation and the Health Research & Educational Trust.

But the news offered little solace to workers, whose wages rose an average of 3.7 percent this year as inflation went up 2.6 percent, the survey said.

Since 2001, family-coverage premiums have jumped 78 percent, while wages have increased 19 percent and inflation 17 percent.

Kaiser says between 1 million and 2 million people join the ranks of the uninsured every year.

In addition, the survey found that among firms offering coverage, 45 percent were very or somewhat likely to increase employees' share of premium costs next year, 37 percent were likely to increase deductibles, 42 percent would probably increase cost-sharing for doctor's-office visits and 41 percent would probably require employees to pay more for prescription drugs.

The rising cost of health insurance has spawned a steady decline in the number of firms that offer it, a rise in the number of uninsured Americans and a generation of workers whose earnings can't keep pace with the cost of coverage.

"The gap between premiums and wages is widening and is actually at its widest point since 2001. That's why people are really feeling the pain," said Drew Altman, president of the Kaiser foundation, a nonprofit educational group.

Altman said the modest slowdown in premium growth is likely the result of high profits for insurance companies, solid hospital revenue, lack of expensive new blockbuster drugs and reduced medical spending resulting from greater cost-shifting to patients.

He said history suggests the slower growth of premiums isn't likely to last. "Since we've done little or nothing as a country to deal with the underlying drivers behind rising health-care costs, there's absolutely no reason to believe that these somewhat slower rates of increase are permanent. The really bad news is that we should expect at some point the rate of increases to return again to even higher numbers."

The average cost for family coverage in 2007 is $12,106, up from $11,480 last year. That's more than a year's salary for a full-time minimum-wage earner and about the cost of an economy car, Altman said.

Individual coverage averages $4,479, compared with $4,242 in 2006.

About 60 percent of employers offered health insurance in 2007, similar to 61 percent in 2006, but lower than the 69 percent in 2000.

That decline is driven mostly by smaller firms with three to 199 workers. Among firms with three to nine workers, 45 percent offered health coverage in 2007, compared with 57 percent in 2000. Offer rates among employers with up to 199 workers have fallen from 68 percent in 2000 to 59 percent this year.

While employers pay the bulk of insurance costs, the share paid by covered workers in 2007 was about the same as in previous years: 28 percent for family plans and 16 percent for individual coverage. On average, covered workers pay about $3,281 a year for family insurance and about $694 annually for single coverage.

The survey, released each year as workers begin open enrollment in health plans, is widely considered the nation's best measure of employer-based coverage. It's based on telephone interviews conducted from January to May with officials from more than 3,000 public and private employers. The overall response rate was 49 percent.

About 79 percent of workers are eligible for health benefits at work, and of those, about 82 percent enroll.

But some aren't eligible, due to mandatory waiting periods and other requirements. Ocean Gold Seafoods in Westport, Grays Harbor County, requires its 500 employees to work a minimum of 500 hours per quarter in three of the last four quarters to qualify for health insurance. That leaves about 425 employees, mostly seasonal fisherman, without insurance, said company Vice President Richard Carroll.

Even the company's 75 full-time employees with health insurance have seen their benefits trimmed while their co-pays and deductibles have increased, Carroll said.

Material from The Associated Press and Gannett News Service is included in this report.