Workers' Family Coverage Reaches $10,880 Average

Small Employers Dropping Plans as Costs Rocket Another 9%

The cost of health insurance for working Americans climbed 9.2 percent this year, the lowest rate of increase since 2000 but still far ahead of both general inflation and workers' pay increases, according to a nationwide survey by the Kaiser Family Foundation.

On average, health insurance for a family cost $10,880 this year, with the employer paying $8,167 and the worker $2,713, the survey found. The total cost almost exactly matches the total annual earnings of a person working full time at the minimum wage, the survey noted.

For a single worker, the average cost totaled $4,024, with $3,413 paid by the employer and $610 by the employee, the survey found.

At the same time, the proportion of employers providing health insurance continued its steady decline, falling to 60 percent this year from 69 percent five years ago. Most of the decline was among very small companies, the survey found, noting that less than half -- 47 percent -- of firms with three to nine workers now offer medical coverage to their employees.

This year is the second in a row with a slower rise in premiums, slipping from 11.2 percent last year and 13.9 percent in 2003. That 2003 rise capped an unbroken string of progressively higher increases dating back to 1996.

"The good news, if there is any good news, is the rate of increase is lower, and the bad news is that that's the only good news," said Kaiser Family Foundation President Drew E. Altman.

Preliminary results, released Tuesday, from an upcoming survey by Mercer Human Resource Consulting and Marsh Benefits showed a similar trend. Employers in that survey were asked about next year, and they emphasized their determination to cut costs, at least for themselves.

"We are seeing a trend for employers to essentially focus on a target" for health care cost growth, which they regard as necessary to remain competitive in the global market, said Blaine Bos of Mercer. That target has ranged between 6 and 7 percent recently, he said, with shifting costs to workers a major tool in achieving it.

Absent plan changes, Mercer said, employers project a rise of about 10 percent next year.

Kaiser's Altman cautioned that the recent slowdown in increases should not be a cause for any great optimism.

"I would say, don't be fooled by the moderation in the rate of increase. We've seen these dips before, and history teaches us they have a way of bouncing back," he said.

About 160 million Americans obtain health insurance through their employers, making it the predominant mechanism for paying for health care. The remainder buy it themselves or are covered under a variety of government programs such as Medicaid for low-income people and Medicare for the elderly. Roughly 47 million people are uninsured.