Health premiums soar for third year
By Theresa Agovino
NEW YORK Healthcare premiums for families in employer-sponsored plans soared 13.9 percent in 2003, the third year of double-digit growth and the biggest spike since 1990, a study found.
Annual family premiums increased to $9,068 this spring, according to a survey of 2,808 companies by the Kaiser Family Foundation and the Health Research and Educational Trust, each a health research organization.
Small firms with three to nine workers faced the largest increase with a 16.6 percent surge in premiums. Midsize companies with between 200 and 999 workers had the smallest increase with a 12.4 percent growth rate.
The portion of the premium paid by an employee for family coverage grew 12.9 percent to $201 a month, or $2,412 annually, while the amount a single employee paid for a policy rose 7.6 percent to $42 a month or $504 a year. Employers paid the remainder of the $3,383 premium for a single coverage.
News not surprising
Experts were not surprised by the rise because employees have shunned the restrictive policies of managed-care plans, which sought to reduce costs, while they demanded the newest, most expensive drugs and procedures.
With that issue unlikely to change and no new strategies employers believe will substantially reduce costs the trend of bigger healthcare spending is expected to continue.
"The key finding is not a surprise but that doesn't mean it is not important," said Drew Altman, president of the Kaiser Family Foundation. "This is more bad news for employers and working people."
On a brighter note, Altman said companies are not dropping coverage despite rising costs and a poor economy. The survey found that 66 percent of companies provide healthcare coverage, the same as last year.
The percentage of premiums paid by employees is substantially unchanged over the past two years, at 16 percent for single coverage and 27 percent for family coverage.
Altman doesn't view this as a victory for workers, however.
"From the point of view of a consumer, the 16 percent is meaningless. They are still paying a lot," Altman said.
Employees' out-of-pocket costs are continuing to rise. For example, employees now must shell out a $29 co-payment for a prescription drug that's not a preferred list of medicines, up from $25 last year, and $20 in 2001. A preferred prescription requires an average co-payment of $19, up from $17 last year and $15 in 2001.
Few options cited
Employers are shopping around for new options. The survey found that 62 percent sought a new health plan, but only 33 percent changed.
Experts say that's because employers don't want to put administrators and workers through the hassle of switching plans unless the savings are assured. And they have little confidence in their options.
One option is a plan to provide employees a set amount in a fund to pay for health needs ranging from glasses to drugs to elective surgery. A single person might receive anywhere from $500 to $1,000 a year, a family double that.
Once the fund is exhausted, a deductible is applied to any additional medical expenses. Above that threshold, a more traditional system, where insurance covers a large percentage of an expense but not 100 percent would kick in.
Another area of potential savings is a disease management program, which helps employees with chronic conditions develop strategies for handling their conditions.