Fewer and fewer businesses are offering health insurance to their workers in a decline that started 5 years ago. And a large part of the problem is premiums that are outpacing inflation and wage increases, according to the 2005 Annual Employer Health Benefits Survey released by the Kaiser Family Foundation and Health Research and Educational Trust.
Sixty percent of companies surveyed are currently offering coverage to workers, a decline from 69 percent reported in 2000 and 66 percent in 2003. The change largely reflects small businesses which are much more likely to stop offering benefits. Based on the survey, 98 percent of businesses with 200 or more workers are offering 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," said Drew E. Altman, PhD, president and CEO, Kaiser Family Foundation.
Overall, premiums have gone up 9.2 percent on average in 2005, down from the 11.2 percent average found in 2004. A little bright note is that this is the first time in five years that the increase hasn't been in the double digits. But the good news ends there. The premium increase is more than three times the growth in workers' earnings (2.7 percent) and two-and-a-half times the rate of inflation (3.5 percent). Shockingly, premiums have risen 73 percent since 2000.
Here is a breakdown of average premiums in 2005:
- The annual premiums for family coverage reached $10,880. To put that in perspective, the gross earnings for a full-time minimum-wage worker is $10,712;
- Workers shelled out on average $2,713 in premiums for family coverage, which reflects 26 percent of the total premium; and
- Regardless of the fact that worker premium contributions have remained largely the same in recent years, in family coverage workers now pay an average of $1,094 more now than they did in 2000.
Of the reasons many firms (mostly small) give for not offering health benefits to employees, the top reason is high premiums (73 percent), followed by small company size (52 percent), and employees having access to other coverage (33 percent).
Looking ahead, more than 40 percent of large companies that offer health benefits indicated that they are "very likely" request that employees contribute more to premiums in 2006, whereas 15 percent of smaller firms say they plan to do so.
The survey also found that in 2005, 61 percent of all insured employees are a part of a PPO, which is an increase of 6 percent over 2004. Additionally, enrollment in HMOs fell to 21 percent in 2005, from 25 percent in 2004.
The 2005 Employer Health Benefits Survey took place between January and May of this year and included 2,995 randomly selected, non-federal public and private firms with three or more employees.
The full survey will be available here: www.kff.org/insurance/7315/.