15 September, 2005 22:35 GMT
Health insurance premiums climbed a bit less in 2005 than in recent years, but persistently rising costs have prompted many small businesses to drop health benefits, according to a nationwide study released Wednesday.
Premiums swelled an average 9.2 percent, falling from the 11.2 percent increase in 2004 and ending four straight years of double-digit escalation, the annual survey by the Kaiser Family Foundation and Health Research and Educational Trust found.
Despite that improvement, the increase once again significantly outpaced the rise in inflation and workers' earnings.
And premiums are 73 percent higher than they were five years ago.
Also troubling was the drop in employers who offer health insurance -- a decline driven almost entirely by small companies that have given up coverage, said Drew Altman, chief executive of the foundation.
Sixty percent of employers offer health insurance to employees, down from 69 percent in 2000.
"It is, of course, mostly smaller firms. And it is mostly affecting lower-wage workers, who are the folks that really take it on the chin," Altman said. "When we step back, what we see is health insurance becoming increasingly unaffordable."
HMOs Are Cheapest
Marianne Fazen, executive director of the Dallas-Fort Worth Business Group on Health, said the rise in local health care premiums is in line with the nationwide results.
But the negotiating clout of North Texas hospitals and doctors may have led to an increase here that's even greater than 9.2 percent.
"I think the Dallas-Fort Worth area might have that a little bit higher," Fazen said. "We tend to have higher costs for health care in general."
Other findings of the study:
The average price of a health insurance policy for a single employee is $4,024, with workers contributing $610 toward that cost.
Family coverage costs an average $10,880 annually, with employees paying $2,713 of that.
"The earnings of a minimum-wage worker today are now less than the cost of family coverage," said Jon Gabel, a co-author of the study.
At the federal minimum wage of $5.15 per hour, a full-time employee would earn about $10,700 annually.
Health maintenance organizations remain the cheapest health plans, but enrollment in HMOs fell to 21 percent of covered workers.
Preferred provider organizations -- managed-care plans that typically have fewer restrictions than HMOs -- are the most common health plans. They cover 61 percent of insured employees, up from 55 percent last year.
Consumer-Driven Plans
In general, the co-payments that employees pay for doctor visits and prescriptions changed little in 2005.
The average co-payment for generic drugs remained $10. But the co-payment for so-called "fourth tier" prescriptions that usually get the least coverage from employers rose to $74.
The annual deductible for PPO members rose to an average $323, up from $287 last year.
About one-fifth of employers offer a high-deductible health plan, with an annual deductible of at least $1,000 for single workers.
But only about 2 percent of employees are enrolled in such "consumer driven" plans, which aim to rein in costs by putting more of the responsibility for healthcare decision-making and spending in workers' hands.
In North Texas, Fazen said numerous employers are experimenting with the strategy.
"It's going to take awhile to get there, just as managed care took awhile to become the most prevalent," she said. "Consumerism is slow going, but I think it's a trend that has legs."
Employers are emphasizing the high-deductible plans, as well as aggressive initiatives to promote healthy habits, as a way to make employees more accountable for their healthcare spending, she said.
"They won't see a rein in costs for a long time. It takes a long time for behavior to change," Fazen said. "I think the more important thing is to start instilling that sense of self-responsibility and self-management in the employees."
Just 33 percent of large firms offer health benefits to their retirees, down from 66 percent in 1988.
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