Health insurance costs continue to climb

WASHINGTON (CNN) -- Costs for health care premiums continue to climb, but most U.S. businesses are picking up the tab, according to a new report.

"More than nine years into our longest economic expansion on record, more employers are now using health insurance coverage to attract and keep workers, and are absorbing rising costs rather than passing them on to their employees," said Drew Altman, president of the Kaiser Family Foundation, which issued the report. "But this may change if the economy cools down, and the bigger challenge that still remains is how to help the 44 million Americans who are uninsured despite the robust economy."

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For a look at the complete Kaiser Family Foundation survey, go to the foundation's Web site

The Menlo Park, California-based foundation's survey, now in its 14th year, polled 3,402 large and small public and private employers to create a snapshot of employer-provided health coverage, including trends in managed care, specific coverage and costs.

Premiums jumped 8.3 percent in 1999, representing the largest increase since 1993, according to the study, which was co-sponsored by the Health Research and Educational Trust in Chicago.

Average annual premiums, which typically are shared by employers and employees, rose to $2,426 for single coverage and $6,351 for family coverage. This is almost double last year's rate of increase, which averaged 4.8 percent nationally. The highest premium increases were observed in the Northeast, while the lowest took place in the West.

The report confirms a trend that many in the industry had already suspected -- that small business is being hit the hardest by the rise. In addition, the survey found significant growth in health care costs for employers who self-insure -- an increase of some 7.1 percent.

"The surge in underlying health care costs stands out as the most troubling survey finding, and is a signal that premiums will continue to grow," said Jon Gabel, a study co-author and vice president for Health System Studies at the Chicago-based trust, a division of the American Hospital Association.

On average, employees contributed $28 a month for single coverage and $138 for family coverage, amounts that actually represented a decrease from last year, the surveyors found. In fact, the average employee payroll deduction for single coverage is at its lowest level since 1996.

"With our robust economy, American workers are finally seeing some improvement in the health benefits they receive," said Larry Levitt, vice president and director of the foundation's Changing Health Care Marketplace Project and a study co-author. "But low-wage employees still face enormous barriers to getting health insurance."

Still, most employers believe they play an important part in providing insurance coverage, and that they do a better job of it than employees could do alone, according to the survey.

Enrollment in preferred provider organizations, which supply the greatest choice, also is growing, the report said. Enrollment in health maintenance organizations and point-of-service plans is leveling off, however.

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Kaiser Family Foundation
Health Research and Educational Trust
Health Insurance Association of America

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