Fewer companies offering health insurance benefits
Smallest employers least likely to offer benefits
The percentage of businesses offering health insurance to their workers has declined steadily over the last five years, as the cost of providing coverage continues to outpace inflation and wage growth, according to a study by the Kaiser Family Foundation.
About 60% of companies nationwide offer health benefits to their employees, down from 69% in 2000, according to a survey by the Menlo Park, CA-based Kaiser Foundation, a non-profit, private foundation that amasses and distributes information and analysis of health care issues. It is not associated with Kaiser Permanente or Kaiser Industries.
Most of the companies that eliminated health benefits have fewer than 200 employees — those most likely to be hurt by the loss or unavailability of benefits. The Kaiser study showed the drop stems almost entirely from fewer small businesses offering health benefits, as nearly all businesses (98%) with 200 or more workers offer such benefits.
"It is low-wage workers who are being hurt the most by the steady drip, drip, drip of coverage draining out of the employer-based health insurance system," says Kaiser Family Foundation President and CEO Drew E. Altman, PhD.
Premium increases outpace earnings growth
The 2005 Annual Employer Health Benefits Survey (available on-line at www.kff.org/insurance) reflects that health insurance premiums in 2005 are still up sharply, though not at the double-digit increase seen a year earlier.
Premiums increased an average of 9.2% in 2005, down from the 11.2% average seen in 2004. The 2005 increase ended four consecutive years of double-digit increases, but the rate of growth is still more than three times the growth in workers' earnings (2.7%) and 2.5 times the rate of inflation (3.5%). Since 2000, premiums have gone up 73%.
The annual premiums for family coverage reached $10,880 in 2005, more than the gross earnings for a full-time minimum-wage worker ($10,712). The average worker paid $2,713 toward premiums for family coverage in 2005, or 26% of the total health premium.
High-deductible health plans
The Kaiser Foundation found that one-fifth of employers that offer coverage are providing high-deductible options, plans that have deductibles of at least $1,000 for single coverage and $2,000 for family coverage. Among employers who offer a high-deductible plan, relatively few (19.5%, or 3.9% of all offering employers) also make a contribution to a health reimbursement arrangement (HRA), offer a plan that would permit an enrollee to establish a health savings account (HSA), or do both.
HRAs and HSAs may play a role in employees' interest in wellness. They are tax-favored accounts that employees can use to pay for medical expenses, and often are described as consumer-driven because patients pay for a greater share of their health care out of pocket, and so may have a financial incentive to reduce their health care spending by being proactive in making good choices when it comes to diet, exercise, and monitoring of potential health problems.
Cost determines benefits offered
The majority of firms that do not offer health benefits to their workers cite cost as a key factor, with nearly three in four (73%) saying high premiums were very important in their decision. In comparison, just over half (52%) said their firm's small size determined their decision not to offer benefits, and one in three (33%) said the fact that their workers had access to other coverage was an important consideration.
According to Kaiser, about 1% of firms say they are "very likely" to drop health coverage entirely in the near future. More than 40% of large firms (200 or more workers) offering health benefits say they are "very likely" to ask employees to pay more in premiums next year.
[For more information contact:
- Kaiser Family Foundation, 2400 Sand Hill Road, Menlo Park, CA 94025. Phone: (650) 854-9400. Web site: www.kff.org.]
You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
- Award-winning Medical Content
- Latest Advances & Development in Medicine
- Unbiased Content