Cost of health insurance continues to climb

Tuesday, Sept. 9, 2003 | 11:17 a.m.

SUN STAFF AND WIRE REPORTS

Health care premiums for families in employer-sponsored plans soared 13.9 percent in 2003, the third year of double-digit growth and the biggest spike since 1990, a study says.

Annual family premiums increased to $9,068 this spring, according to a survey of 2,808 companies by two health research organizations, the Kaiser Family Foundation and the Health Research and Educational Trust.

Small firms, with three to nine workers, faced the largest increase with a 16.6 percent surge in premiums. Midsized companies with between 200 and 999 workers had the smallest increase with a 12.4 percent growth rate.

A study of Las Vegas-area businesses in July found similar results, with 60 percent of Las Vegas businesses paying an average premium increase of 10 percent or more. The University of Nevada, Las Vegas' Center for Business and Economic Research reported 94 percent of Las Vegas-area businesses are paying more for health care benefits this year.

In the latest national study, the portion of the premium paid by an employee for family coverage grew 12.9 percent to $201 a month, or $2,412 annually, while the amount a single employee paid for a policy rose 7.6 percent to $508 a year, or a little more than $42 a month. Employers paid the remainder of the $3,383 premium for a single coverage.

Commercial plan costs are rising between 13 percent and 18 percent, said Tyler Mason, spokesman for PacifiCare, a big insurer in Southern Nevada. His company's premiums increased between 14 percent and 15 percent this year. Sierra Health Services, the largest health insurer in Las Vegas, said premiums this year increased 10 percent to 12 percent.

Experts were not surprised by the rise because employees have shunned the restrictive policies of managed care plans, which sought to reduce costs, while they still demanded the newest, most expensive drugs and procedures.

With that issue unlikely to change -- and no new strategies employers believe will substantially reduce costs -- the trend of bigger health care spending is expected to continue.

"The key finding is not a surprise but that doesn't mean it is not important," said Drew Altman, president of the Kaiser Family Foundation."This is more bad news for employers and working people."

On a brighter note, Altman said companies are not dropping coverage despite rising costs and a poor economy. The survey found that 66 percent of companies provide health care coverage, the same as last year.

The percentage of premiums paid by employees is substantially unchanged over the last two years, at 16 percent for single coverage and 27 percent for family coverage.

Altman doesn't view this as a victory for workers, however.

"From the point of view of a consumer, the 16 percent is meaningless. They are still paying a lot," Altman said.

Michael Graham, deputy director of the Nevada Small Business Development Centers, disagrees.

"It's just like any other tax or cost, that price gets passed onto the clients or the consumer," he said. "When you can't pass that cost on, ... a business has to make a decision to either increase their sales somewhere or decrease the expenses."

"In this particular case small business is the same as big business," Graham said. "You can raise your deductible (or) eliminate some of your benefits. Then your costs can remain the same."

Employees' out-of-pocket costs are continuing to rise. For example, employees must now shell out a $29 co-payment for a prescription drug that's not on a preferred list of medicines, up from $25 last year, and $20 in 2001. A preferred prescription requires an average co-payment of $19, up from $17 last year and $15 in 2001.

Employers are shopping around for new options. The survey found that 62 percent sought a new health plan, but only 33 percent changed. Experts say that's because employers don't want to put administrators and workers through the hassle of switching plans unless savings are assured.

Wurth Group of North America is currently shopping for a new plan for its 2,325 employees after its premiums rose 20.5 percent this year, atop a 21 percent jump in 2002.

"It is a hassle to change plans so the savings have to be material," said Gerald Rudick, vice president of human resources of the New Jersey-based maker of fasteners, bolts and screws. "I'm not sure what the magic saving number is -- is it $100,000, $1 million? We just don't know."