The Association of U S West Retirees



Health costs rise faster than pay
Percentage rise is 5 times that of workers' pay. Average annual premiums paid by Colorado workers and employers for family coverage hit $12,386.
By Will Shanley, Staff Writer
Denver Post
Tuesday, December 5, 2006

Health care costs in Colorado have jumped 82.2 percent since 2000, more than five times the earnings increase for workers.

For family health coverage, the average annual premium paid by workers and employers rose to $12,386 in 2006, up from $6,797 in 2000.

Meanwhile, worker wages statewide grew by 15 percent, or $3,947, to a median of $30,337 per year.

Those findings were reported Monday in the study "Premiums Versus Paychecks:  A Growing Burden for Colorado's Workers."  Families USA, a health care advocacy group based in New York, prepared the report.

Employers are asking workers to absorb an ever-greater share of rising health care costs, cutting into employees' net income, the report found.

"Workers don't have as much bargaining power as they once did," said Sylvia Allegretto, an economist with the Economic Policy Institute, a nonpartisan group in Washington, D.C.  "And we've had this ever-increasing inflation that was eating up those wage gains."

Allegretto said the nation's sluggish wage growth is also due to a deceptively weak job market.

Despite a relatively low unemployment rate of 4.4 percent nationwide in October, Allegretto said some people have simply left the workforce, which skews the unemployment rate lower.

Even though health care costs continue to escalate, separate research shows that the pace of that growth has moderated.

Health insurance premiums increased by 7.7 percent this year, the smallest one-year jump since 2000, according to a study released in September by the Kaiser Family Foundation.

Still, the Families USA report noted, "As premiums increase and plans offer thinner benefits, working families are shouldering a growing share of health care costs."

Lexie Carlson, a retired metro-area schoolteacher, can relate to those findings.

Carlson said she gets roughly a 3.5 percent cost-of-living increase in her pension payments each year.  But she says the modest bump never makes it into her bank account because she is increasingly paying a larger tab for health insurance.

"It's pretty frustrating," said Carlson, 59, a former middle school art teacher in Cherry Creek.  "It's like I don't even get any increase."

But not all workers are feeling pinched.

Joanne Kozovich, a 26-year- old working in the accounting industry, said:  "I'm happy with the cost of my insurance.  I don't expect to get it for free."

Rodney Lee, 52, works in sales for an oil drilling company.  He said his firm pays for his entire health care plan and that "my wages aren't stagnating."

Search for solutions

Companies are looking at ways to blunt the increasing expenses, including altering retirees' benefits.

Employers say they are being forced to look for a variety of solutions to rising health care costs, including passing additional expenses on to workers.

"It's a big challenge for not only Qwest but all employers," said Erik Ammidown, director of employee benefits for the telecommunications giant.

Among other strategies, Ammidown said the company this year rolled out what's called a consumer-driven health plan, which is akin to a 401(k) plan for medical expenses, and has expanded programs aimed at improving employee health.

In addition, Qwest starting next year will require any former management employee or nonunion employee who retired after 1990 to pay future increases in health care costs.

Partly because of high health care costs, real earnings -- or wages adjusted for inflation -- declined slightly nationwide over the past six years to a median of $27,299, according to Monday's Families USA study, which used data from the U.S. Census Bureau.

That downward trend mirrors the findings of the 2006 Economic Report of the President.

The annual report showed that the average real wage for workers with a bachelor's degree declined 5.2 percent, from $54,396 to $51,568, from 2000 to 2004.

Workers with high school degrees saw paychecks increase 1.6 percent, from $28,179 to $28,631, according to the president's report, which used data supplied by the Department of Commerce.

Those figures -- adjusted for inflation -- do not include other benefits provided by employers, such as health care and retirement plans.

Productivity paradox

The nation's 12 percent gain in production has surprisingly failed to create real wage gains.

Allegretto, the economist, said that while real wages declined during the past six years, there are signs that this is starting to change.

She said real wages increased by 1.1 percent in 2005, the first increase since 2001.

"The interesting point is that we've had stellar productivity numbers," said Allegretto, pointing to the nation's 12 percent growth in gross production since 2000.  "That usually translates into real wage gains, but we haven't seen that."

Staff writer Will Shanley can be reached at 303-954-1260 or