Health Costs for U.S. Business Outpace Inflation
By Aliza Marcus
Sept. 11 (Bloomberg) -- Health-insurance premiums paid by U.S. businesses for their workers rose 6.1 percent this year, continuing to outpace inflation and wages, a study found.
The average family plan offered by a company now costs $12,106, or $62 less than a full-time worker earning the U.S. minimum wage makes, according to the survey published today in the journal Health Affairs. Companies pay an average of $8,824 for such a policy, with the worker paying the difference.
The cost of providing health care is cutting into the ability of U.S. companies to compete internationally, business organizations say. Since 2001, premiums for family coverage have increased 78 percent, while wages have gained 19 percent and inflation 17 percent, Kaiser said in the statement.
``If wages were keeping up, this wouldn't be so painful,'' said Drew E. Altman, president of the Henry J. Kaiser Family Foundation, which conducted the survey, at a news conference today. ``If this were a one-year phenomenon, it wouldn't be so painful.''
Insurance costs have been rising faster than wages and inflation since the late 1990s. This year's increase, after a 7.7 percent rise in 2006, was the smallest in eight years.
There are ``peaks and valleys'' in the rate of growth of health-care premiums, ``but overall, the trend is certainly'' up, said Altman. ``Every year health insurance becomes less affordable for families and businesses.''
Americans are worried about the cost of health care. How to make it more affordable and cover the uninsured is a leading domestic issue in the 2008 presidential campaign. Seventy-five percent of people polled in a Kaiser June survey said they were ``very'' or ``somewhat'' worried about rising costs -- more than worried about being a victim of terrorism or not being able to pay for their home.
The prices make insurance unaffordable for many Americans, said Karen Davis, president of the New York-based Commonwealth Fund. A record 47 million people in America, or 15.8 percent of the population, were without coverage in 2006, up from 15.3 percent in 2005. Median family income was $48,200 in 2006, according to data released by the U.S. Census Bureau last month.
``Health-care costs are still a problem, whether viewed as a squeeze on employers or on middle-class families,'' Davis said.
Insurers may be raising premiums less than in past years as they compete in a declining market to provide coverage to businesses, said Gary Claxton, director of Kaiser's Health Care Marketplace Project and the lead author of the study.
Sixty percent of employers in the U.S. provide health insurance this year, down from 61 percent in 2006, the survey found. In 2000, 69 percent of firms offered coverage.
`Competitive Premiums'
``The employer market is not getting any bigger, so the way you fight for market share is by taking away business from somewhere else, and the way you do that is by having competitive premiums,'' said Claxton.
A number of employers surveyed indicated they expect to make ``significant changes'' in health coverage next year. Raising the employee premium contribution was listed as ``very likely'' by 21 percent of the companies, and 12 percent said it was very likely they would increase deductibles.
To contact the reporter on this story: Aliza Marcus in Washington at amarcus8@bloomberg.net
Last Updated: September 11, 2007 16:37 EDT