Rising Healthcare Costs

According to a Kaiser Family Foundation survey, premiums for employer -provided health insurance in the U.S. rose 9.2% in 2005. This is after 4 successive years of double-digit increases but this slower rate is certainly not a good news. Even this slower rate of increase still has health insurance premiums rising more than twice as fast as overall inflation (3.5%), and more than three times faster than workers' wages (2.7%). Since 2000, premiums for coverage for a family have increased by 73%, compared with inflation growth of 14% and wage growth of 15%.

In dollar terms, average annual premiums for employer-sponsored coverage rose to $4,024 for single coverage and $10,880 for family coverage, according to the report. The family coverage of about $11000 is about equal to the full-time earnings of a minimum-wage worker. That is why more companies that offer health benefits are offering high- deductible plans (defined as $1,000 deductible for single coverage, $2,000 for family coverage).

In 2005, 20% of firms offered such plans, up from 10% last year and 5% the year before. About 56% of workers with coverage are in a health plan that requires that a deductible be met. In PPOs (preferred provider organizations), the average deductible for in-network services is $323 for single coverage and $679 for family coverage. Enrollment in PPOs grew over the last year while HMO (health maintenance organization) enrollment declined. PPOS enrolled 61% of employees with health coverage, up from 55% in 2004 and remain the most common type of plan. In 2005, one-third of firms with 200 or more workers are offering retiree coverage, about the same as last year but down from 66% in 1988.