COVERAGE:
Plans Struggle To Justify Premium Costs To Even The Deepest Pockets
Published on Thu Feb 02, 2006
Employers' best efforts aren't enough to make health care affordable for non-retiree workers.
Plans have long relied on employers to help bridge the cost gap between employees and their health care premiums. Those days could soon be over.
As employers are able to contribute less and less toward workers' premiums, more and more workers are foregoing coverage. The number of uninsured Americans has risen for four straight years; 45.8 million people had no health insurance during 2004, according to the U.S. Census Bureau. And it's no wonder, considering that for six years in a row, health care premiums have grown more than twice as fast as prices overall or workers' earnings, notes a recent Alliance for Health Reform study, "The Uninsured and Rising Health Costs." The increase isn't exclusive to the elderly--the percentage of uninsured people under age 65 grew from 17.6 percent to 17.8 percent during 2003 to 2004, the study reveals.
A Career Path For Coverage
There is some good news--the number of Americans with health insurance grew to 245.3 million in 2004, up 2 million from 2003. Nevertheless, employer-based coverage has steadily declined from 2000 to 2004, while government-subsidized coverage has continued to rise.
Slower premium growth rates are probably just a flash in the pan. Two additional studies project that premiums will grow at a steeper rate during 2006. Hewitt Associates projects a 9.9 percent increase in premiums for 2006, up from 9.2 percent in 2005. Mercer Human Resources Consulting predicts a 6.7 percent rise, up from 6.1 percent.
In light of swelling health care costs, employers are experimenting with a variety of different cost-savings measures that allow them to provide coverage while minimizing expenses. For instance, 80 percent of workers' plans use case management to control costs, and 56 percent use disease management measures, the Alliance study reports. In these types of plans, enrollees must get their plan's approval before they obtain high-cost procedures and care. In addition, 20 percent of employers who offer health insurance include a high-deductible consumer-driven plan--often coupled with a health savings account--as an option.
But despite employers' best efforts to provide competitive coverage, today's workforce faces an uphill battle as retirement age draws near. In 2005, one in eight firms with 1,000 or more employees stopped subsidizing retiree health benefits for new-hires and future retirees, the study reports.
Full-Time Or Part-Time, Costs Don't Discriminate
Employers can only do so much to help employees keep up with skyrocketing premiums. In 2000, 69 percent of all employers offered health care coverage to employees. Today, that number is down to 60 percent, the Alliance reports. Both full-time and part-time workers are feeling the pinch--premium contributions have increased a whopping 82 percent during the last five years for single coverage, and 67 percent [...]
