A survey released last week indicating that premiums for employer-sponsored health plans increased an average of 6.1% in 2007 gave more ammunition to employers, providers and lawmakers fighting for a faster healthcare overhaul.
The ninth-annual Employer Health Benefits Survey, produced by the Kaiser Family Foundation and the Health Research & Educational Trust found that this year marked the slowest rate of premium growth since 1999, but it still outpaced workers wages and inflation.
The seemingly good news on slowed premium growth doesnt take into account the fact that in absolute terms healthcare insurance is slowly moving out of the reach of consumers and employers. We are in a period of notable moderation in rate increases, but weve seen these periods of moderation before, and they never last, said Drew Altman, president and chief executive officer of the Kaiser Family Foundation. No one in the real world is celebrating because it doesnt feel like moderation.
The average annual premium for family coverage this year is $12,106, with workers contributing, on average, $3,281 for the policy.
Since 2001, premiums for family coverage rose by 78%, while wages rose 19% and inflation 17%. A family will pay on average $1,500 more out of pocket in 2007 than six years ago for health insurance premiums, the survey found.
This shows you why the pain level is so high, Altman said at a news conference unveiling the latest figures. Theres no scientific tipping point where healthcare is unaffordable, but it seems weve crossed a threshold in affordability.
The percentage of businesses offering health benefits to workers has remained unchanged over the past three years, with about 60% of employers offering coverage. Some 158 million Americans get health insurance through their employer.
That might seem like good news, but considering the strong labor market and relatively low premium rate increase, one might expect an uptick in coverage, the reports authors said. By contrast, during the last period of strong economic growth, in 2000, 69% of firms offered health benefits.
And the smallest businesses are dropping coverage. The percentage of small businesses with between three and nine workers offering benefits declined to 45% this year from 48% in 2006, according to the survey.
We are not falling off a cliff, but we are witnessing a slow erosion of healthcare benefits for workers, said Jon Gabel, senior fellow at the National Opinion Research Center at the University of Chicago and co-author of the survey.
Cost-sharing between workers and employers remained stable, as in past years, but once again workers at the smallest firms carried a bigger share of premium costs than those at large firms. Workers at businesses with three to 199 employees paid $4,236 annually for family coverage, compared with $2,831 annually for workers at larger firms.
The rising cost of healthcare still haunts these workers like a dark cloud, said Mary Pittman, president of HRET, an affiliate of the American Hospital Association. Many of them cannot afford to stay insured.
Payers, however, interpreted the surveys overall findings as good news. The results show that the country is taking steps in the right direction on healthcare costs, Karen Ignagni, president and CEO of Americas Health Insurance Plans, said in a written statement, citing adoption of disease management and wellness programs and tiered prescription drug plans as factors in slowed premium growth.
Officials representing business interests said the survey shows that getting control of costsnot just covering the uninsuredis key to healthcare reform. This is an uncontrollable operating cost for businesses, said Andrew Webber, president and CEO of the National Business Coalition on Health. As the Kaiser study points out, if we are going to solve the problems in healthcare, not only do we need to solve the issue of access, but affordability.
Todd Stottlemyer, president and CEO of the National Federation of Independent Businesses called the survey another reason to sound the alarm to our leaders in Congress.
Despite employers desire to find ways to reduce healthcare costs, the Bush administrations highly touted consumer-directed health plans have only made small inroads into the market, covering about 5% of insured workers, essentially the same as the previous year, the survey found. An estimated 3.8 million workers are enrolled in health savings accounts or health reimbursement arrangements, according to the report. Only about 10% of employers surveyed offered these high-deductible plans, up from 7% a year ago.
Webber said his members are concerned that consumer-driven plans leave too much decisionmaking up to the individual, who might forgo a necessary drug, procedure or doctors visit to save money, ultimately costing the system more if that person ends up in the emergency room or with an untreated chronic condition. Employers have a responsibility to bring consumers into the cost equation, he said. The big concern is that consumers are going to reduce demand for services they need, and that hurts productivity and costs more dollars in the long run.
The survey took place between January and May and included 3,078 randomly selected, nonfederal public and private companies with three or more employees.
California Gov. Arnold Schwarzenegger referred to the survey when announcing last week that hed call a special session of the state Legislature on healthcare. The state has 6.8 million uninsured, and the governor has pledged to extend benefits and tackle rising costs this fall.