Health costs race past inflation

Premiums rise less than last year's growth pace, but still outpace inflation and worker earnings, survey says.

NEW YORK ( -- Health insurance premiums in 2007 rose 6.1 percent, the lowest growth rate in eight years but still well above inflation and worker earnings, according to the latest annual survey from the Kaiser Family Foundation.

It was the fourth consecutive year of slowing growth and the lowest rate of growth since 1999, when premiums increased 5.3 percent.

Average annual costs
Premiums and levels of worker contributions for family coverage.
Total Premium Worker Contribution
PPO $12,443 $3,236
HMO $11,879 $3,311
Source:Kaiser Family Foundation
Note: PPO is preferred provider organization. HMO is health maintenance organization.

Since 2001, however, premiums for family coverage have increased 78 percent, while wages have gone up 19 percent and inflation has gone up 17 percent.

The number of employers offering health care benefits was essentially unmoved at 60 percent, down from last year's 61 percent.

Employees' annual average cost for single coverage is $4,479 and $12,106 for family coverage. Single workers on average pay $694 of the cost out of their own pockets, while worker contributions for family coverage is $3,281.

According to the survey, 95 percent of firms with 50 or more employees offer health insurance, while smaller firms of 3 - 9 workers are least likely to offer benefits (45 percent).

Overall, 61 percent of firms that offer healthcare benefits allow workers to use pre-tax dollars to pay for their share of their health premium costs.

Covered workers on average pay 16 percent of the overall premiums for single coverage and 28 percent for family coverage - figures that have remained relatively stable over the past years.

However, workers in small firms (three to 199 workers) pay more on average toward the cost of family coverage ($4,236 annually) compared to larger firms ($2,831 annually), the survey said. The opposite is true for single coverage, with workers at small firms annually contributing $561, less than the $759 that workers at larger firms contribute.

For firms with deductibles, the average for single coverage in the most common plan - preferred provider organization (PPO) plans - is $461, down from $473 last year.

Co-payments are also required of a majority of covered workers. The average co-payments were $11 for generic drugs, $25 for preferred drugs, and $43 for non-preferred drugs. Forty-four percent of them have plans requiring co-payments of $20 or $25 for physician visits and prescription drugs.

Among the workers with co-payments for in-network office visits, 75 percent have a co-payment of $15, $20, or $25 per visit with a primary care physician.

For the future, many employers said they expect to make significant changes to their health plans and benefits in 2008.

Overall, 21 percent of firms said they are "very likely" to raise workers' premium contribution next year. Some firms also said they are "very likely" to increase office visit cost-sharing, increase deductibles, and increase prescription drug cost-sharing. Top of page