Health premiums rise faster than wages
WASHINGTON (Reuters) - The gap between rises in health insurance premiums and wages is at its widest point in six years, a survey said on Tuesday, which experts said puts workers in a perilous position should the economy turn sour.
Premiums for employer-based health insurance have risen 6.1 percent in 2007, down from a 7.7 percent increase a year earlier, according to an annual survey of about 2,000 employers by the Kaiser Family Foundation, a nonprofit research group.
But despite the slowdown in premium increases, the cost for family coverage has risen 78 percent since 2001, while wages rose 19 percent and prices for goods and services have risen 17 percent in that period, according to the report.
"Even though the rate of increase is moderating a little bit, nobody is celebrating, because it's year after year of increases," the foundation's president, Drew Altman, said.
The findings come days after the government unexpectedly said U.S. employers cut 4,000 jobs in August, the first drop in four years. The moderation in premium rises comes amid robust economic growth, but that is seen threatened if growth stalls.
"Despite the economic expansion that added 2 million new jobs from April 2006 to April 2007, the employer-based system can do no better than tread water," said Jon Gabel, a senior fellow at the National Opinion Research Center at the University of Chicago and a report co-author. "It makes one ask, what will happen during the next economic downturn?"
The average annual workers' contribution to their health premiums is significantly higher than a year earlier, the report said. Individual workers paid an average $694 and families $3,281, compared with $627 and $2,973 a year earlier.
The annual survey is based on phone interviews with randomly selected public and private employers and covers the time period from spring 2006 through spring 2007.
Most Americans with health insurance, or about 158 million people, get coverage through their jobs. Steep price rises for insurance and rising numbers of uninsured have pushed health care to the top of many voters' domestic worries in polls.
The percentage of employers offering health care plans has fallen to 60 percent from 69 percent in 2000.
HARDEST ON SMALL FIRMS
Companies that have dropped coverage are mostly those with fewer than 200 workers, according to Kaiser. About 40 percent of U.S. workers are employed by companies of that size.
Martha Van Hise, vice president of human resources at privately held Atlantic Mutual Insurance Co in Madison, New Jersey, said the property and casualty insurance firm had a big increase in premiums this year because of a few costly cases.
That's par for the course for a company with fewer than 250 workers, she said, adding it was mulling a separate deductible or large co-payment for hospitalizations to cover costs.
"I've never been very comfortable with that. My feeling is you don't go to hospital unless it's serious and it seemed unfair," Van Hise said. "But unfortunately we need to have the people that are truly using the plan to pay more."
New high-deductible plans have been touted as a way to curb a steady rise in health-care costs. They are often labeled "consumer-directed" because patients have more control over spending but tend to bear more costs, with higher deductibles.
About 5 percent of all workers were enrolled in such plans in 2007, statistically unchanged from 4 percent a year before.
"The one thing you can say for sure is that these plans are not having an impact on national health-care costs because there aren't enough people in them," Altman said.
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