Insurance—Those With and Those Without - Health Insurance Costs Continue To Skyrocket

According to a survey conducted by the Kaiser Family Foundation and the Health Research and Educational Trust, 2003 was the seventh straight year of increases and third consecutive year of double-digit increases in insurance costs (Annual Employer Health Benefit Survey, September 2003). Private health insurance premiums rose 13.9%, the largest annual increase since 1990. Premiums averaged $3,383 for individual coverage and $9,068 for family coverage. Employee contributions remained stable for individual coverage but contributions for family coverage increased by 13%. Workers paid an average of $508 per year toward the premium for individual coverage and $2,412 per year toward the premium for family coverage.

The survey found that two in five workers incur a separate deductible, co-payment, or co-insurance for each hospital admission. Deductibles and co-payments averaged about $200 per admission. Workers enrolled in preferred provider organizations (PPOs) faced higher deductibles for out-of-network services, HMO members had higher copayments for office visits, and across all plans, enrollees faced higher co-payments for prescription drugs.

The increase was attributed to larger insurance claims resulting from higher prices for hospital care and prescription drugs coupled with increasing consumer demand for, and utilization of, health care services. The researchers reported many employers, particularly large employers with two hundred or more workers, said they would likely have to increase the amounts their employees must pay for heath care coverage in 2004, and some employers said they would very likely offer workers a high deductible plan (a plan with a deductible of at least $1,000 for individual coverage) next year. As reported in surveys from prior years, employers remain extremely concerned about continuing increases in health care costs, with more than half of those surveyed identifying health insurance the "greatest concern for the company."

The researchers and other industry analysts observe that if there is no relief from premium increases in the near future, despite employers' stated reluctance to drop employee health care coverage, some may stop offering health benefits to their employees and some workers may be forced to drop their coverage because they are unable to contribute their share of the cost. Industry observers and policymakers fear that rising insurance premiums will swell the ranks of Americans without insurance coverage.