Rise in Cost of Employer-Paid Health Insurance Slows

By Christopher Lee
Washington Post Staff Writer
Wednesday, September 12, 2007

The cost of employer-provided health insurance rose 6.1 percent this year, the smallest jump since 1999 but still well above the increase in wages and consumer prices, according to an annual survey released yesterday by the Henry J. Kaiser Family Foundation.

The average annual premium for family coverage amounts to $12,106 in 2007, of which $3,281 is paid by the worker. (The employer picks up the rest.) That is up from $11,480 last year, of which the worker paid $2,973, according to the survey of nearly 2,000 employers.

The $12,106 average cost of family coverage this year is roughly equivalent to a year's salary for a full-time worker earning the minimum wage, which is $12,168.

"Health insurance is becoming increasingly unaffordable for more and more Americans, and for many businesses," said Drew E. Altman, president of the foundation. "It's the public anxiety about that which is propelling this issue back to the forefront in our country today."

In Kaiser's survey, 75 percent of respondents said they were "very worried" or "somewhat worried" about the increasing cost of health coverage. That figure was more than the percentages of those who were worried about not being able to pay their rent or mortgage (44 percent), being the victim of a violent crime (49 percent) or losing their job (34 percent).

The latest census figures, released last month, show a continuing decline in employer-provided health coverage as business leaders complain that spiraling health-care costs are threatening their competitiveness, forcing companies to shift costs to workers or considering dropping the benefit altogether.

The percentage of people covered by employer-based health insurance fell to 59.7 percent in 2006, down from 60.2 percent in 2005. It was 64.2 percent in 2000.

About 177 million people had employer-based coverage last year, census figures show. That is 2 million fewer than at the turn of the century, even though the overall population has been increasing.

"We are witnessing a slow but certain long-term erosion of our employer-based system," said Jon R. Gabel, an author of the Kaiser study and a Washington-based senior fellow at the nonprofit National Opinion Research Center.

The number of Americans without health insurance rose to a record high of 47 million in 2006, an uptick that Census Bureau officials attributed largely to continuing declines in employer-sponsored coverage.

Still, the Kaiser survey found that the cost of coverage grew more slowly in 2007 than in recent years. The 6.1 percent increase in the average premium continued a four-year trend of slower cost growth since the peak growth of 13.9 percent in 2003. Average premiums had grown at least 7.7 percent annually since 1999.

The recent trend of slower cost growth is "very significant," said Karen Ignagni, president of America's Health Insurance Plans, the industry trade group. She credited insurers' efforts to curb costs and promote health through disease-management programs and increased use of generic drugs. "I think we are seeing the effects of that," she said.

CONTINUED     1        >

© 2007 The Washington Post Company