Health Care Coverage Costs Have Risen 13.9% This Year

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Some benefits firms predict increases in the cost of employer-paid health coverage will slow in 2004, but results from a new survey show that the cost of coverage has increased 13.9% this year.

Researchers found that the average cost of buying family coverage through an employer-sponsored plan is now $9,068.

Although employers pay an average of 73% of the premium, the average amount that the employees pay has increased 50% over the past three years, to $2,412.

The percentage of employers with fewer than 200 employees that say they are somewhat or very likely to drop health coverage altogether has increased to 16%, from 12% in 2002, and serious interest in dropping coverage at larger employers has increased to 8%, from 5%.

Meanwhile, even though employers and employees are paying far more, employees are facing bigger bills when they seek medical care.

Deductibles, copayments and other out-of-pocket expenses are all going up, and the formulas for calculating employees share of the tab are more complicated, according to analysts at the groups that sponsored the survey.

“Its becoming harder for workers to know how much they will have to pay for their health care,” says Gary Claxton, a director of the Health Care Marketplace at the Henry J. Kaiser Family Foundation, Menlo Park, Calif., which led the survey effort.

A polling firm surveyed 2,808 U.S. employers of all sizes for the organizers between January and May.

When researchers asked employers how well various strategies might control health coverage costs, the strategy that drew the most responses of “very effective” was efforts to increase use of disease management programs. Twenty-two percent of the employers believe disease management programs can help hold costs down.

Sixty-eight percent of the employers surveyed said consumer-driven plans, which combine high-deductible coverage with health reimbursement arrangements, could be either very effective or somewhat effective.


Reproduced from National Underwriter Life & Health/Financial Services Edition, September 15, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.