Section Front Front Page |
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| By MICHAEL R. McKAY | |
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Employers will pay 12 percent more for employee health insurance benefits next year. However, the rate of health care cost increases overall will slow in 2004 for the first time in five years. These were the good news-bad news findings of a survey conducted by Towers Perrin, a benefit consulting firm that had polled 200 employers with an average labor force of 7,200. The survey "reinforces concerns that health costs, while slowing, continue to rise at a double-digit rate," a report in the Sept. 29 Wall Street Journal said. The Journal article, written by Vanessa Fuhrmans, quoted Jim Foreman, managing director of Towers Perrin's health and welfare division. "Over time, employers are paying much, much more, and so are their employees," Foreman said. According to Foreman, companies will shift more and more of the costs to their employees as higher premiums, deductibles or co-payments and reduced benefits or a combination of the four options. Next year, employees will pick up an average 19 percent of the cost of individual health insurance and 22 percent of the cost of family coverage, according to the Towers Perrin survey. Individuals who retired before age 65 and who were eligible for continued coverage under their employer plans will pay 41 percent of the cost, and retirees 65 or older will pay 44 percent of the cost of Medicare supplemental insurance. In 2004, health care insurance will cost an average of $7,308 per year per employee, an increase of $742 over the 2003 price tag. The Journal article provided one telling example of the impact--a bank with 40,000 employees and health care benefit cost increases of between 15 percent and 18 percent a year to a whopping $200 million today, even with increased co-payments and other cost reduction measures. Earlier, the Kaiser Family Foundation and the Health Research and Educational Trust reported that health insurance benefit costs had risen 13.9 percent between January and May 2003. This will be the third consecutive year of double-digit cost increases (12.9 percent in 2002 and 10.9 percent in 2001), the two organizations said. The figures did not include increases in the costs of prescription drugs. Group health plans paid 15.6 percent more between January and May 2003 than in the same period a year earlier, the Kaiser study said. The Kaiser study focused on 1,800 employers of varied size nationwide. Eighty percent of these employers said they will pass on more of the cost burden to their employees next year. According to Kaiser, the average premium for a family health plan in 2002 was $9,068 a year, with the employee share averaging $2,412. The employee share for family coverage had gone up 47 percent since 2000. Health insurance costs for a single employee with no dependents averaged $3,383 in 2002, Kaiser said. On average, the employee paid $508 of the total. The employee share of such individual health insurance increased 52 percent since 2000. Kaiser found that, in the companies it studied, employees paid an average of 27 percent of the cost of family health insurance coverage and 16 percent for individual coverage. Fifty-seven percent of the employers will increase the share of prescription drug costs paid by employees next year, and 44 percent will raise medical, hospitalization and diagnostic deductibles and/or co-payments. The average deductible for in-network"Preferred Provider Organization" service (PPO) this year is $275--57 percent more than the average in 2000. For out-of-network PPO services, the average deductible is $561, a 65 percent increase from two years ago. "The rising cost of health care also weighs on the broader economy," Fuhrmans wrote in the Sept. 10 Wall Street Journal. "Health care costs have become one of the largest expenses for many companies, and double-digit increases will make it even more difficult to hire new employees. As companies pass on more of the burden to their work forces, employees are being forced to allocate more of their income to health care." Meanwhile, the U.S. Census Bureau reported that, in 2003, the number of Americans who have no health insurance at all rose to 43.6 million--15.2 percent of the population. The total was 2.4 million higher than in 2002. The increase was the sharpest since the early 1990s, when 15 percent of the population had no health insurance benefits. As report report by Tony Pugh noted in the Sept. 3 Miami Herald: "The plight of the uninsured is one of the most crucial problems in modern medicine. People without coverage are more likely to forgo preventive care and seek treatment only when their illnesses require visits to hospital emergency rooms. By that time, their illnesses typically are more advanced and more costly to meet." The cost of health insurance and the growing number of people who do not have it are complex issues that will have to be addressed soon in some definitive way by Congress and the White House. Meanwhile, the AMO Medical Plan--one of the very few in the U.S. that does not impose premiums on participants--will continue to do what it can to contain costs and provide medical, hospitalization and diagnostic benefits at the highest possible levels for AMO families everywhere. |
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