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Since 2000, premiums for family coverage have risen 59 percent, and employee contributions have risen 57 percent, while wages have increased by only 12 percent.
"The cost of family health insurance is rapidly approaching the gross earnings of a full-time minimum-wage worker," said Drew Altman, president and chief executive of the Kaiser Family Foundation, in a release announcing the results of the study. "If these trends continue, workers and employers will find it increasingly difficult to pay for family health coverage and every year the share of Americans who have employer-sponsored health coverage will fall."
While three out of every five non-elderly Americans is covered by an employer's health insurance, employer-sponsored health insurance premiums increased an average of 11.2 percent in 2004, five times the rate of growth in workers' earnings and inflation, according to the survey of more than 3,000 public and private employers. The increase was less than the 13.9 percent increase seen in 2003, but still the fourth consecutive year of double-digit growth.
The survey, conducted every year since 1999, found that 24 percent of employees work for firms where premiums rose five percent or less, while 28 percent of employees work for firms that saw premiums increase by more than 15 percent.
There are at least five million fewer jobs providing health insurance in 2004 than in 2001, according to the survey. Much of the decline comes from the small business sector, where the percentage of businesses offering health insurance has fallen from 68 percent in 2001 to 63 percent in 2004. By comparison, 61 percent of all employers are offering health coverage to their workers, which is a slight decline from the 62 percent seen in 2003, but down significantly from the 65-percent peak seen in 2001.
Preferred provider organizations (PPOs) continue to be the preferred form of health coverage, with more than half of all employees enrolled in a PPO. Health maintenance organizations (HMOs), which are less expensive, cover about 25 percent of employees with health coverage, while conventional health insurance plans have all but disappeared, covering just 5 percent of insured workers, according to the study.
In 2004, premiums reached an average of $9,950 annually for family coverage ($829 per month) and $3,695 ($308 per month) for individual coverage. Premiums for family coverage under PPO plans rose to $10,217 annually versus $9,317 annually in 2003.
Worker contributions held steady from 2003 levels for individual coverage, but contributions for family coverage increased 10 percent, consistent with the average overall premium increase. The percentage of premiums paid by workers has been statistically unchanged over the past several years, at 16 percent for single coverage and 28 percent for family coverage.
Over 90 percent of workers with family coverage pay a contribution toward their health insurance premiums, the survey found. Small and large firms contribute about the same amount toward individual coverage, but large firms contribute significantly more than small firms toward family coverage.
The upward trend in employee contributions shows no signs of abating, especially among large firms. About half of the large firms said they were "very likely" to increase employee contributions in the next year, while just 15 percent of firms with fewer than 200 employees said such increases were "very likely." Overall, 41 percent of employers said they were "very likely" or "somewhat likely" to raise