Premiums on health insurance rise by 5%
Posted on Thursday, September 25, 2008
Health insurance premiums for U. S. companies and their workers rose this year by 5 percent — the smallest increase in nine years — compared with last year, according to a survey released Wednesday.
This year’s rise to $ 12, 680 for families and $ 4, 704 for individuals was the smallest since the survey by the Kaiser Family Foundation began in 1999, when premiums for employersponsored insurance grew 5. 3 percent.
Premium growth has slowed nationwide partly because workers pay more outof-pocket expenses, foundation experts believe.
“I do think part of it is that we’re in a period where people are paying more of the bill and also at the same time are being hit with other economic shocks,” Drew Altman, the Menlo Park, Calif.-based nonprofit foundation’s chief executive officer and president, said in a call with reporters. “That [curbs ] their use of health care.”
Premiums with the largest Arkansas-based private health insurer, Arkansas Blue Cross and Blue Shield, increased 4. 3 percent on average in 2008, compared with about 3. 1 percent last year, spokesman Max Heuer said. Premiums at QualChoice of Arkansas rose about 3 percent in 2008, said Michael Stock, its chief executive officer.
Workers nationwide on average are spending $ 3, 354 this year for family premiums, up 2. 2 percent from $ 3, 281 last year, said the foundation’s report, which was issued in connection with the Health Research & Educational Trust, a nonprofit group affiliated with the American Hospital Association.
More workers nationwide today have high-deductible plans, Wednesday’s report said. Nationwide, about 18 percent of employees had deductibles of at least $ 1, 000, an increase of 6 percentage points from 2007.
A separate study was released Wednesday showing that the proportion of Americans in families facing problems paying medical bills rose from 15. 1 percent in 2003 to 19. 4 percent last year.
The study by the Washington, D. C.-based Center for Studying Health System Change, a research group, said the number of people living in those families increased by about 14 million during the period.
While he believed cost shifting is a contributor to slowing price increases in the United States, Altman said there’s no simple or agreed-upon answer to why cost increases have slowed.
Gary Claxton, a co-author of the report, said another possibility is that insurers underestimated their costs when setting their premiums for the year.
“It’s possible that the premiums aren’t reflecting what they think their actual costs are at the moment,” Claxton said. “There’s going to be a little bit of pressure on them probably to raise premiums to do something about their revenues.”
“We’re at a time where healthcare plans have been competing for market share,” and recently “we haven’t seen any new blockbuster drugs that are paid for by insurance,” Claxton said.
Altman expects price increases to pick up speed at some point.
“We haven’t dealt with the fundamental, underlying issues,” he said.
“Principally it’s the advancing expense of medical technology, which we have not found an effective way to deal with in our country and are really afraid to deal with in our country because people want it and like it,” he later added. “And politically it’s a tough issue to take on.”
Premiums have ballooned dramatically since 1999 for employees. Workers at that time spent $ 1, 543 of a total family premium cost of $ 5, 791.
“Even modest growth in premiums and deductibles can result in financial challenges for many working families, particularly when coupled with high food and gas prices in 2008,” Dr. John Combes, interim president for Health Research & Educational Trust, said in a release.
As workers’ share of health costs has increased, an increasing number of Arkansans have elected to drop coverage because they’re no longer able to afford it, said Kevin Ryan, executive associate director for the Arkansas Center for Health Improvement.
In Arkansas, the percentage of uninsured people grew 0. 7 percentage points, from 16. 8 percent in 2004-05 to 17. 5 percent in 2006-07. From 2000-01, 14. 8 percent of Arkansans had no health insurance.
U. S. Census data for 2005-07 showed that 485, 000 Arkansans were uninsured.
Not all companies raised employee costs this year.
Stan Grise, chief financial officer for Munro & Co. Inc., a Hot Springs-based footwear maker that employs about 600, said the company has not raised premiums for employees this year. Management has helped keep costs under control at Munro, a self-insured company, in the past 18 months, he said.
The last time the company raised premiums was sometime around July 2007, when premiums rose about 9 percent, Grise said.
Nationwide, consumer-directed plans, which shift a larger share of the insurance burden to employees, grew last year, the foundation said.
Eight percent of companies in the Kaiser survey use a consumer-directed plan, versus 4 percent in 2006. About 5. 5 million employees are enrolled in the plans.
Responses to the foundation’s survey were collected from more than 1, 900 companies between January and May.
About 14 percent of companies said they were very likely to increase employee’s contribution to premiums next year.
Few firms, however, said they would likely drop coverage or restrict eligibility, the report said.
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