Fewer companies offering health benefits as costs rise
Premiums growing at 3 times rate of pay

By Jeffrey Krasner
Boston Globe Staff
Thursday, September 15, 2005

As health insurance costs continue to spiral upward, fewer companies are offering health benefits to their employees, according to a national survey by the Kaiser Family Foundation.

About 60 percent of companies nationwide offer health benefits to employees, compared to 69 percent in 2000, the survey found. Most of the companies that eliminated health benefits have fewer than 200 employees.

''It is low-wage workers who are being hurt the most by the steady drip, drip, drip of coverage draining out of the employer-based health insurance system," said Drew E. Altman, president of the foundation, a nonprofit that provides information and analysis of healthcare issues but does not take sides in policy debates. ''Every year, health insurance becomes less affordable to working people."

The annual survey underscored the ongoing increases in healthcare costs. It estimated insurance premiums rose this year by an average of 9.2 percent nationwide, compared to 11.2 percent last year and 13.9 percent in 2003. But Altman warned against reading too much into this year's lower number.

''Don't be fooled by the moderation in the rate of increase," he said. ''We've seen these dips before."

The survey said premium costs are rising at about three times the rate of increase of the average worker's earnings and at about two-and-a-half times the rate of inflation.

''We shouldn't expect anything other than for the rate of health premiums to greatly outpace the growth of wages and the growth of the general economy," Altman said.

Increases in Massachusetts have exceeded the national average. This year, most health plan members faced jumps of 10 to 13 percent, and the state's major health insurers are predicting increases of 10 to 12 percent next year for many customers.

''While the national news isn't great, the Massachusetts news is even worse," said John E. McDonough, executive director of Health Care for All, an advocacy group seeking to reduce the number of uninsured. ''These data are another piece of evidence showing how the healthcare crisis continues and why we need strong, assertive public action to address it."

The survey found that most workers were covered by preferred provider organizations, or PPOs. Such organizations direct patients to a core group of doctors, but are less restrictive than traditional health maintenance organizations, which covered 21 percent of workers, according to the survey. Only 3 percent of workers have traditional indemnity insurance plans, which cover all of a subscriber's medical expenses with few restrictions.

About one-fifth of employers now offer high-deductible health plans. The plans, which are widely known as ''consumer-driven health plans," are intended to reduce consumers' use of healthcare services by shifting more costs to employees through high deductibles and copayments. Only 1.6 million people are enrolled in such plans, according to the survey.

''Consumer-driven plans are proving attractive to some, but with just a couple million people now enrolled, it's too early to know whether they'll have a meaningful effect on the health system," said Gary Claxton, foundation vice president and co-author of the study, in a statement.

Richard C. Lord, chief executive of Associated Industries of Massachusetts, an employers' trade group, said none of his members have stopped offering health insurance benefits, but paying for them remains their top concern, he said.

''Five years of double-digit increases has created a tremendous burden," Lord said. ''Most are trying to continue to offer coverage. Some are sharing more of the cost with their employees."

He said the number of uninsured continues to increase because some employers can't offer the benefit, while some workers choose not to purchase insurance because they can't afford it.

The annual health insurance premium for a family of four is $10,880, the survey found, which is more than the yearly pay, before taxes, of a full-time worker earning the minimum wage.

Jeffrey Krasner can be reached at krasner@globe.com.