Health-Care Costs For Companies, Employees Surge

The Wall Street Journal 09/10/04
author: Venessa Fuhrmans
(Copyright (c) 2004, Dow Jones & Company, Inc.)

Employer-sponsored health-care premiums rose 11.2% this year in the U.S., a nationwide survey showed, marking the fourth consecutive year that companies and their employees have been walloped with a double-digit increase in health-benefit costs.

The 3,000-employer survey, conducted by the Kaiser Family Foundation and Health Research and Educational Trust, is considered a barometer of U.S. companies' health costs, and it contains one glimmer of good news: After seven years of ever-higher premium increases, 2004 was the first in which the rate of growth actually moderated.

Last year, employer health-care premiums jumped 13.9%, their fastest clip since 1990.

But after four years of double-digit growth -- at a time when the general inflation rate in the U.S. is 3% -- the cost of providing health care, particularly to employees' family members, is fast becoming unaffordable for many companies, say the study's researchers. The crisis is especially acute for small businesses already struggling with tougher global competition and is discouraging many of them from hiring for new jobs. The average family premium for a Preferred Provider Organization, the type of health plan that covers most workers in the U.S., now costs more than $10,000 a year.
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What troubles many employers and health-care policy experts is that steep premium increases persist even after years of cost-shifting measures. Higher co-payments, deductibles and employee co-insurance rates are largely responsible for what little moderation there has been. But while they have caused employees to pay an average 64% more in out-of-pocket premiums and deductibles than they did in 2000, the measures have had only limited success in reining in health-care costs.

Some more facts (some of the same), but still no solid reasons for the cost increases...