Government

Health care premiums increase more slowly

A survey also shows that 7% of employers now offer consumer-directed health plans.

By Doug Trapp — Posted Oct. 23, 2006

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Health care costs aren't increasing as fast as in years past, but they're still squeezing employers and employees alike.

For the third year in a row, the price of health insurance increased more slowly than before: 7.7% between spring 2005 and spring 2006. That's significantly slower than the 9.2% increase of spring 2005 and 11.2% increase of spring 2004, says the 2006 Kaiser Family Foundation/Health Research and Educational Trust "Employer Health Benefits 2006 Annual Survey."

But that still means health care prices climbed twice as quickly as inflation. "Insurance is still going up faster than people's paychecks," said Gary Claxton, vice president of the Kaiser Family Foundation and one of the report's co-authors. Overall, premiums have increased between 80% and 90% since 2001, Claxton said.

"It's not like we've slayed the beast," Claxton said.

The number of small businesses offering health benefits stabilized this year at 60%. That compares with 65% as recently as 2003.

The Kaiser/HRET survey also found that despite public fanfare, high-deductible plans with a savings option, such as health savings accounts, have failed to catch on widely. Only 7% of employers in 2006 offered these types of plans, compared with 6% last year. The report called that a "statistically insignificant" change.

"Too early to tell"

Insurance company representatives didn't agree with that characterization of these products, known as consumer-directed health plans.

"In the insurance world, it's going at light speed," said Joel Swanson, spokesman for Blue Cross and Blue Shield of Minnesota. "It may seem slow, but not to us."

In January 2004, 1.6% of Blues subscribers used consumer-directed plans. By August of this year more than 6% -- or 170,000 subscribers -- were using them, Swanson said.

At first, consumers often worry about how restrictive and difficult to administer consumer-directed plans will be, said Alan Spiro, MD, chief medical officer for Anthem National Accounts, a division of Wellpoint.

"Despite that, when they're in it, they find they love it. We're getting tremendous positive members' feedback from it," Dr. Spiro said.

Anthem National has more than 700,000 of its 9 million customers enrolled in consumer-directed plans.

But the true value of high-deductible plans with savings accounts is not yet known, said Rick Kellerman, MD, president of the American Academy of Family Physicians. "It's too early to tell," Dr. Kellerman said. "We don't have enough accounts out there."

Doctors like the idea of patients being more responsible for health care expenses, but the concern is that patients may put off preventive care because of the expense. "We don't want the health savings accounts to prevent people from getting necessary care," Dr. Kellerman said.

At Blue Cross and Blue Shield of Minnesota, the cost of certain vaccinations, checkups, screenings and other preventive care is built into premiums instead of being deducted from HSAs, Swanson noted.

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ADDITIONAL INFORMATION

Down, but still up

Health care insurance premium increases have been slowing in recent years, but they still outpace inflation and wages, which jumped 3.5% and 3.8%, respectively, this year.

Increase
1999 5.3%
2000 8.2%
2001 10.9%
2002 12.9%
2003 13.9%
2004 11.2%
2005 9.2%
2006 7.7%

Note: Percentages are reported in the spring of each year.

Source: Kaiser/HRET "Employer Health Benefits: 2006 Annual Survey," September

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External links

"Employer Health Benefits 2006 Annual Survey," Kaiser Family Foundation and the Health Research and Educational Trust report (link)

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