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Health Insurance Costs Keep Rising

Premiums for Employer-Sponsored Plans Grew by 11.2%, Survey Finds

By Albert B. Crenshaw
Washington Post Staff Writer
Friday, September 10, 2004; Page E01

Employer-sponsored health insurance premiums rose 11.2 percent this year, registering the fourth consecutive double-digit annual increase and pushing the cost of family coverage under the most common type of plan past $10,000, according to a new nationwide survey.

While this year's rise was down slightly from the 13.9 percent of last year, it is still "five times the rate of growth in wages [and of] inflation," said Drew E. Altman, president of the Kaiser Family Foundation, which released the survey of more than 3,000 employers yesterday, along with the Health Research and Educational Trust. Its findings and those of other surveys predict continuing growth of health care costs next year.

What We Pay Average annual health care premiums for covered U.S. workers, 2004.

The unceasing rise will depress wages, affect hiring decisions and encourage outsourcing, Altman said. The number of uninsured will continue to rise, while the cost shouldered by workers lucky enough to have insurance will also climb, putting greater pressure on family budgets, he said.

The percentage of all workers who have health insurance through their employers continues to slip, with 5 million fewer jobs offering health insurance now than in 2001, the Kaiser survey said. Though the decline in workers who have health insurance through their own employers was slight -- the number fell to 61 percent this year from 62 percent in 2003 -- the drop from the peak of 65 percent in 2001 is "significant," Kaiser said. The share of workers at small firms -- those with three to 199 workers -- getting health insurance declined to 50 percent from 58 percent in 2001.

In contrast to the hopeful outlook of a few years ago, most experts see no prospect of a global solution that will bring costs under control, Altman said. Where once it was thought that managed care or a plan proposed during the Clinton administration might rein in medical costs in a major way, proposals out there today, such as disease management or consumer-driven health care, appear unlikely to have more than a minor impact, he said.

"I have no answer," Altman said. Various strategies may be able to clip a percentage point or two off the growth rate here and there, but "we should be prepared to pay more," he said.

The Kaiser survey's findings parallel the fears surrounding public programs such as Medicare, which also have seen costs soar.

Jack Rowe, chief executive of Aetna, said in an interview yesterday that the findings might, if anything, understate the seriousness of the problem. He noted that the "take-up rate" -- the share of workers who sign up for health insurance when it is offered -- has declined significantly recently, suggesting that an increasing number of people "are not taking up insurance because they can't afford it."

A survey released last month by Mercer Human Resources Consulting found that employers estimate that health care costs would rise almost 13 percent on average next year if they make no changes in their health plans. Even after changing benefits and negotiating with or switching medical providers and insurers, employers said, they expect costs to rise an average of 9.6 percent.

A rise of 13 percent "is painful to consider," said Blaine Bos of Mercer when the study was released. "And some just aren't going to sit still for it."

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