Health costs well outpace inflation
Survey finds health costs rose less in 2006 than last year, but far faster than wages and inflation.
By Jeanne Sahadi, senior writer

NEW YORK ( -- Health insurance premiums this year rose 7.7 percent, the lowest growth rate in six years but still more than double the growth rate in inflation and worker earnings, according to the latest survey from Kaiser Family Foundation.

Indeed, that outsized growth has been the case in at least 12 of the past 18 years. Since 2000, premiums have risen 87 percent while wages have only gone up 20 percent and inflation has increased 18 percent.

Worker portion of health costs 2006
Avg. cost for single coverage: $627
Avg. cost for family coverage: $2,973
Avg. PPO deductible for singles: $473
Avg. PPO deductibles for families: $710-$1,034
Source:Kaiser Family Foundation

In the same period, the percentage of employers offering healthcare coverage has fallen from 69 percent six years ago to 61 percent.

Employees' annual average cost for single coverage in 2006 is $627, up $293 since 2000; the average for family coverage is $2,973, up $1,354 since 2000.

Workers at firms with fewer than 200 employees pay the highest rates: an average of $689 for single coverage (versus $515 at large companies); and $3,550 (versus $2,658 at large companies).

In terms of deductibles, the average for single coverage in the most common plan - a preferred provider plan (PPO) - is $473, up from $455 last year. For family coverage, the average deductible is $710 for plans that apply a deductible per family member, and $1,034 when the deductible applies to the family as a group.

In terms of employees' co-payments for doctor visits, a majority of covered workers pay $15 or $20, while 15 percent pay $25. In terms of co-payments for drugs, the average is $11 for generics, $24 for preferred drugs and $38 for drugs included on a plan's preferred drug list.

Rising health care costs aren't the biggest concern for some employees - getting coverage is. According to Kaiser, just over a third of high-wage firms (defined as those paying a majority of their workers more than $20,000) don't offer health insurance at all.

And among companies that do offer health benefits, only 78 percent of their workers are eligible for it.

According to jobs site, 28 states introduced legislation calling for health insurance mandates in 2006, but the majority of the bills were defeated, most recently in California. Gov. Arnold Schwarzenegger vetoed a bill calling on large employers to spend a minimum of 8 percent of payroll on health coverage for workers or contribute to a state health care fund.

Despite rising costs, Kaiser found that only 6 percent of companies that offer coverage would consider eliminating it or limiting eligibility for it. But 39 percent said they were likely to increase deductibles or increase employee payments for drugs. Forty-nine percent said were likely to increase the percentage workers pay for the premium.


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