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Health Insurance Costs Climb; Workers Pay 1/4 Of Premiums

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By EMILY FREDRIX, The Associated Press

Published: September 12, 2007

Health insurance premiums paid by workers and their employers rose an average of 6.1 percent this year, outpacing inflation and pay increases and taking a bigger chunk out of families' budgets, according to a new survey.

Premiums for employer-sponsored health insurance for the average family topped $12,000 - with employees picking up about one-fourth of that cost - although the increase in premiums slowed for a fourth straight year.
Insurance costs probably will rise again next year, according to the survey released Tuesday by the Kaiser Family Foundation, a health care research organization that annually tracks the cost of health insurance.

Many of the more than 3,000 companies surveyed said they planned to make significant changes to their health plans and benefits, and nearly half said they were very or somewhat likely to raise premiums.

This year, premiums reached an average of $12,106 for a family of four, with workers paying, on average, $3,281 of that.

Premiums to cover a single person cost $4,479, with employees paying $694. The portions both families and single people pay in premiums has nearly doubled since 2001.

The companies reported that premiums for families increased 6.1 percent, on average. That's the lowest growth rate since 1999, when premiums rose 5.3 percent and cost an average of $2,196 for individuals and $5,791 for families. Health care premiums rose 7.7 percent last year, when individuals paid an average of $4,242 and families paid $11,480.

This year's slowdown doesn't mean much when it outpaces wages, which rose an average of 3.7 percent, and inflation, which went up 2.6 percent, said Drew Altman, the foundation's president and CEO.

Since 2001, the cost of premiums has gone up 78 percent, far outpacing a 19 percent increase in wages and 17 percent jump in inflation.

'It just shows health insurance is becoming increasingly unaffordable for working people and many businesses in our country,' he said.

That rising cost, coupled with the fact that it is outpacing inflation and wage growth, is pushing companies and employees to forgo insurance, Altman said. That's why the number of uninsured Americans continues to rise, he said. The Census Bureau estimates 15.8 percent of Americans were uninsured last year, up from 15.3 percent the year before.
Health insurance companies continue to see higher profits, but premiums keep going up because costs rise each year, said Gary Claxton, vice president of Menlo Park, Calif.-based Kaiser. Much of that is because, through the years, the health care system produces more tests, procedures and products that can treat more people, and all of that costs more, he said.

About 158 million people have insurance through their jobs. Sixty percent of companies offer insurance to their employees, down from 69 percent in 2000.

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