2007 September 11 Tuesday
Employers Medical Premium Growth Slows

Employer paid medical insurance premiums are still rising faster than inflation and wages but not as fast as in recent years.

Washington, D.C. – Premiums for employer-sponsored health insurance rose an average of 6.1 percent in 2007, less than the 7.7 percent increase reported last year but still higher than the increase in workers’ wages (3.7 percent) or the overall inflation rate (2.6 percent), according to the 2007 Employer Health Benefits Survey released today by the Kaiser Family Foundation and Health Research and Educational Trust.  Key findings from the survey were also published today in the journal Health Affairs.

The 6.1 percent average increase this year was the slowest rate of premium growth since 1999, when premiums rose 5.3 percent.  Since 2001, premiums for family coverage have increased 78 percent, while wages have gone up 19 percent and inflation has gone up 17 percent.  
The average premium for family coverage in 2007 is $12,106, and workers on average now pay $3,281 out of their paychecks to cover their share of the cost of a family policy.  

“We’re seeing some moderation in health-cost increases, but premiums for family coverage now top $12,000 annually,” Kaiser President and CEO Drew E. Altman, Ph.D. said.  “Every year health insurance becomes less affordable for families and businesses.  Over the past six years, the amount families pay out of pocket for their share of premiums has increased by about $1,500.”

On page 97 of the full report a table shows that deductibles are rising. See page 101 as well. Also see page 112 for a table which shows that copays for doctor visits are rising as well. In a nutshell, employers are reducing premium price rises by shifting more costs onto employees.

The shifting of costs onto employees will reduce the demand for medical services and drugs. The medical cost growth at a rate more rapid than general economic growth has got to stop sooner or later. But when?

Share |      By Randall Parker at 2007 September 11 10:39 PM  Economics Health

John S Bolton said at September 12, 2007 2:52 AM:

A pensioner will often not realize that his $40 payment is for a $800 billing item. If he had to pay $200 he might refuse to do the $800 item before it was billed, or even ask beforehand how much this would cost. The monster growth of the medical services and their costs, is based on a money no object attitude on the part of those who decide whether or not to do something addditional. At each stage the shyster interposes himself, making each new level of extravagance the new standard of care,through the lawsuits which find negligence in someone's getting less than what others got.

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