Health-care costs still outpace inflation, study shows

The inflation rate actually fell last year, but the average price employers paid for a family health-insurance premium rose 5 percent. Wages rose 3.1 percent.

That continued a long-term trend, as increases in health-insurance costs have far outstripped inflation and wages for years, according to an annual report on employee health benefits released yesterday by the Kaiser Family Foundation and Health Research & Educational Trust, an affiliate of the American Hospital Association.

Premium prices have risen 131 percent since 1999, compared with increases of 38 percent in wages and 28 percent in inflation, according to the report, based on a survey earlier this year of almost 3,200 U.S. companies with three or more employees. That does not take into account increases in other kinds of employee cost-sharing, such as deductibles and co-payments for medical care and drugs. Those also have gone up.

"It speaks to the pain level that people feel out in the real world," said Drew Altman, Kaiser's president and chief executive officer.

Such disproportionate increases have played a big role in the push for health-care reform and have transformed it into an "economic pocketbook issue," he said.

Responses to a separate telephone survey of 1,250 adults that was conducted in July showed slightly more people were worried about not being able to afford needed medical care than about paying their mortgages or losing their jobs.

The benefits survey found that the average cost of a family premium is now $13,375, with employers contributing $9,860 of that and employees $3,515. Individual policies now average $4,824, essentially unchanged from last year.

If the price of family insurance continues growing 6 percent a year, it would reach $24,180 in 10 years; Altman said an average of 8.7 percent was "very plausible." That scenario would put a family policy above $30,000 by 2019.

Increases likely were relatively modest last year because of the recession and the reform debate, Altman said. "I've never seen the industry raise its rates significantly in the face of pending national health-care legislation," he said.

Other findings include:

Ninety-eight percent of companies with more than 200 employees provided health benefits, only 1 percent less than in 1999. But just 46 percent of the smallest firms, those with three to nine employees, offered insurance last year, down from 56 percent in 1999.

Twenty-two percent of workers faced $1,000 deductibles for individual coverage. That was much more common in small firms.

The percentage workers contribute was steady in recent years, about 17 percent of the premium for single coverage and 27 percent for family. Low-wage workers paid a higher proportion of the cost.

Twenty-one percent of companies said they were very likely to raise workers' contributions next year, and 16 percent said they were very likely to raise deductibles.