Health Insurance Premiums Continue to Climb
Health care costs continue to be one of the biggest expenses for business owners, and a new report shows just how much employers are paying.
According to the annual Employer Health Benefits Survey by the Kaiser Family Foundation, premiums for employer-sponsored health insurance increased by an average of 6.1 percent this year, with the average premium for family coverage now topping $12,000.
"Every year health insurance becomes less affordable for families and businesses," Kaiser president and CEO Drew E. Altman said in a statement. Over the past six years, premiums for family plans have increased the most -- by 78 percent, the study found. Additionally, employees are paying an average of $3,281 out of their paychecks to cover their share of a family policy.
The study, which included responses from 3,078 public and private firms with three or more employees, also found that health insurance premiums in 2007 were comparatively higher than the increase in workers' wages (3.7 percent) and the overall inflation rate (2.6 percent) for the year. However, the 2.4 percent difference in the rise of health-care premiums and workers' wages this year is still much lower than the 10.9 percentage point gap reported in 2003.
And while employers continue to struggle with rising health-care costs, the 6.1 increase in premiums this year was the slowest rate of premium growth since 1999, the study found. Last year, the cost of premiums rose 7.7 percent. However, researchers reported no change in the percentage of the U.S. workforce with employer-sponsored coverage from 2006 to 2007.
For the past two years, approximately 60 percent of the firms surveyed said they offer their employees health benefits, compared to 69 percent in 2000. And while 99 percent of businesses with 200 workers or more were able to offer health insurance this year, only 45 percent of small firms with three to nine employees were able to do so.
When it comes to employee contributions, workers with employer-sponsored health insurance pay an average of 16 percent of the overall premiums for single coverage, and 28 percent for family coverage. The study also found that employee contributions are less on average for workers at small firms -- with an annual employee contribution of $561 at small firms compared to $759 at large firms.
According to the survey, some employees are also benefiting from pre-tax health care benefits -- 61 percent of the firms that offer insurance allow their employees to use pre-tax dollars to pay their share of the premium costs.
When asked about health coverage in 2008, a majority of employers said they plan to make significant changes to their health plans and benefits next year. Approximately 21 percent of firms said they are "very likely" to raise the amount of employee contribution, while 13 percent are looking to increase office visit cost-sharing and 12 percent plan to increase deductibles. However, most firms said they are unlikely to restrict eligibility for coverage or drop the benefit altogether.