Health insurance premiums increase five times earnings, inflation growth rate

Employer-sponsored health insurance premiums increased an average of 11.2 percent in 2004, less than 2003's 13.9 percent increase, but still the fourth consecutive year of double-digit growth, according to the 2004 Annual Employer Health Benefits survey released by the Kaiser Family Foundation and Health Research and Educational Trust (HRET). Premiums for employer-sponsored health insurance rose at about five times the rate of inflation (2.3 percent) and workers' earnings (2.2 percent).

In 2004, premiums reached an average of $9,950 annually for family coverage ($829 per month) and $3,695 ($308 per month) for single coverage according to the survey. Family premiums for PPOs, which cover most workers rose to $10,217 annually ($851 per month) in 2004, up significantly from $9,317 annually ($776 per month) in 2003. Since 2001, premiums for family coverage have risen 59 percent.

The survey also found that the percentage of all workers receiving health coverage from their employer in 2004 is 61 percent, about the same as in 2003 (62 percent) but down significantly from the recent peak of 65 percent in 2001. As a consequence, there are at least 5 million fewer jobs providing health insurance in 2004 than 2001. A likely contributing factor is a decline in the percentage of small employers (three to 199 workers) offering health insurance over this period. In 2004, 63 percent of all small firms offer health benefits to their workers, down from 68 percent in 2001.

Facing continued premium increases, many employers say they looked to make cost-saving changes in the past year. Among firms offering coverage, 56 percent report that they shopped for a new plan in the past year. Of those firms, 31 percent (17 percent overall) reported changing insurance carriers in the past year and 34 percent (19 percent overall) reported changing the type of health plan offered.