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Employers Hit by Higher Health Care Insurance Premiums for 2005

September 15th 2005

Employers Hit by Higher Health Care Insurance Premiums for 2005

Health Insurance Costs are dark blue line while CPI and wages are light blue lines (1988-2005)

Health insurance premiums have sky-rocketed over the last five years, according to research done by the Kaiser Family Foundation (KFF).  The only good news is that it has only jumped 9.2 percent this year as compared to 13.9 percent two years ago.  The rate of increase is lower this year but it is still outstripping both the cost of living (CPI) and wage increases. 

Premiums have soared 73 percent since 2000 putting a financial burden on employers and those buying insurance on their own.  The average worker is paying $51 per month for single coverage which equates to 16 percent of their premium.  The average family benefits cost the employee $266 per month at 26 percent of the premium.  This has increased from $27 and $129 respectively since 1999.

Compare this to the inflation rate for 2005.  The inflation rate stands at only 3.5 percent.  Wages only went up 2.7 percent that year.  The shortfall has hit employers and some have drastically cut benefits, their portion of the premium or the health insurance coverage altogether.  This trend is expected to continue.

 
 

Most employers have made employees pay more out-of-pocket to help absorb the increase.  Annual deductibles and co-pays for office visits and prescription drugs have jumped up the past couple years.  Many are now paying $20 to $25 per office visit where they used to pay only $10 or $15 before.

Twenty percent of the firms surveyed offer their employees High Deductible Health Plans (HDHP).  These plans are used in a hope to keep unnecessary visits to a minimum.  The average annual premiums for employer-sponsored coverage rose to $4,024 for singles and $10,880 for a family.

According to the study, across all plan types, average deductibles for single coverage in small firms of 3-199 workers are substantially higher than averaged deductibles in large firms of 200 or more workers.  Over half of the covered workers are faced with separate cost sharing when they are admitted to a hospital.  One third of the employees are faced with a separate deductible or co-payment for hospital admissions (average employee co-payment of $241). 

The good news is that the cost of health care may have leveled off.  This may be why premium increases have dropped into the single digits.  According to Joseph Mercola, Author of the Total Health Program, back in 2002 “While the overall profits of Fortune 500 companies declined by 53 percent - the second deepest dive in profits the Fortune 500 has taken in its 47 years 1 - the top 10 U.S. drug makers increased profits by 33 percent.”

The interesting point is that Mercola claims the insurance companies have been picking up the tab.  Since most people are not paying for it directly they are able to get away with charging outrageous prices.   

 

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Copyright 2005 Best Syndication                                     Last Updated Saturday, July 10, 2010 09:39 PM