Cost of Insuring Workers' Health Increases 11.2%

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http://www.nytimes.com/2004/09/10/business/10care.html?th

 

September 10, 2004

 

Cost of Insuring Workers' Health Increases 11.2%

By MILT FREUDENHEIM

 

The cost of providing health care to employees has

risen 11.2 percent this year, according to the results

of an authoritative national survey reported

yesterday.

 

It was the fourth consecutive year of double-digit

increases in health insurance premiums, which has

resulted in a steady decline in the number of the

nation's workers and their families receiving employer

health care coverage.

 

The annual survey of 3,000 companies, conducted

between January and May by the Kaiser Family

Foundation and Health Research and Educational Trust,

is considered a reliable indicator of health care

costs paid by companies and their workers.

 

Perhaps the only good news in the report was its

indication that the rate of increase slowed from the

record 13.9 percent in 2003, turning down for the

first time since 1996. But this year's jump was still

more than five times the national 2.2 percent increase

in wages from the spring of 2003 to spring 2004, as

reported by the Bureau of Labor Statistics.

 

Small businesses are being especially hard hit as the

average family coverage in preferred provider

networks, the most common type of health plan, has

risen to $10,217, with employees paying $2,691 of the

total. In response to the soaring costs, many small

companies are simply no longer offering coverage of a

worker's spouse and children.

 

" Small employers just cannot afford to spend the bulk

of $10,000 on a family health plan for a $30,000

employee, " said Kate Sullivan Hare, the executive

director of health care policy for the United States

Chamber of Commerce. That same family coverage " used

to cost $4,500 about six years ago, " she noted.

 

The survey found that the share of companies of all

sizes offering health benefits to their workers

declined to 61 percent, down from 65 percent in 2001.

As a result, an estimated five million fewer workers

have access to employer health care coverage than the

127 million reported in 2001, said John Gabel, vice

president of Health Research and Educational Trust.

 

With health care high on the list of voter concerns in

election year polls, the Bush and Kerry campaigns

quickly jumped into the fray.

 

Senator John Kerry blamed Bush administration

policies. " It's wrong to allow skyrocketing health

care costs to choke off new jobs, eat up family

incomes and leave millions uninsured, " Mr. Kerry, the

Democratic presidential candidate, said yesterday

during a campaign stop in Des Moines.

 

The Census Bureau said last month that the nation's

total number of uninsured people had risen by 1.4

million in 2003, to a record 45 million.

 

Reed Dickens, a spokesman for the Bush-Cheney

campaign, said: " This administration has helped slow

the rate of increase for the first time in seven

years. The president's approach to this is a

consumer-driven approach, and John Kerry's philosophy

is to shift the decision-making power to the federal

government and shift the financial burden to the

taxpayer. "

 

But Ms. Sullivan Hare at the Chamber of Commerce said

that " neither presidential candidate is really talking

about government policies to control health care

inflation. " She added that most employers feel

frustrated by the problems but they do not see " any

magic bullets to help bring down costs. "

 

Health premiums are rising faster than the underlying

cost of doctor and hospital care, as consolidation in

the insurance industry has given insurers greater

clout. The monthly cost of two-person coverage for

workers and their spouses increased 23 percent, to

$836.78, this year at the John G. Shelley Company, a

distributor of industrial products with 26 employees

in Wellesley Hills, Mass. Monthly premiums for

individuals rose 13 percent, to $418.39.

 

Full family coverage at Shelley is now $1,255.17, with

the company offering to pay nearly half. Kara

Connaughton, the financial controller at the Shelley

company, said nobody signed up. " They all have their

children covered under their spouse's plan, " she said.

 

Frank Ciotola, an owner of Da Vinci Ristorante in

northwest Columbus, Ohio, is another employer

grappling with premium inflation.

 

" It's the same story with everybody I talk to, " Mr.

Ciotola said. " We got 31 percent increase last month

to renew our insurance. " He said he erased the

increase by changing to a health savings plan, with a

$1,700 annual deductible, for the three owners and

four full-time employees in the plan.

 

The Kaiser report said that a growing number of

employers were familiar with the health savings

approach, a centerpiece of President Bush's health

care program that combines pretax savings accounts and

high deductibles. But the report said that only 3.5

percent of the employers in the survey had adopted the

plans. The favorable tax feature took effect last

January.

 

Megan Hauck, deputy policy director of the Bush

campaign, said that a survey by Fortis Health, a

company that sells the health savings plans, reported

that about one-third of the early recruits were

" previously uninsured. "

 

For years, employers have been paying about 84 percent

of premium costs, with workers picking up the

remaining 16 percent, the survey said. But in dollar

terms, that now means the average employee's share has

risen by more than $1,000 since 2000, said Drew

Altman, the chief executive of the Henry J. Kaiser

Family Foundation.

 

The rising cost of health insurance is not only

affecting the current working population.

 

The federal Centers for Medicare and Medicaid

announced last week that Medicare premiums deducted

from Social Security checks of elderly and disabled

people would rise 17.4 percent next year to $78.20 a

month. Meanwhile, Social Security payments are

expected to rise by only 2 to 3 percent, according to

the Medicare Rights Center, an advocacy group for

Medicare beneficiaries.

 

Copyright 2004 The New York Times Company