Between spring 1999 and 2000, employers saw an 8.3% increase in health insurance premiums, the largest premium hike in seven years. Suprisingly this increase has not reduced the number of employers offering health insurance coverage to their employees, nor have employers passed the increase on to their employees. In fact the percentage of employers offering coverage increased for 2000. Employers pointed to high spending for prescription drugs as the chief cause of premium increases.
The Kaiser Family Foundation’s annual Employer Health Benefits Survey, released on September 7th, 2000, provides detailed information on employer health insurance coverage – enrollment trends in health plans as well as cost and coverage.
Rise in Premiums
The 8.3% increase in monthly premiums for employer provided health insurance drove employer/employee shared annual cost to $2,426 for single coverage and $6,351 for family coverage. Last year the increase in premiums was almost half as much at 4.8%.
For employers who are self-insured, and only pay out the actual cost of the health care claim, the premium increase was 7.1% compared to last years increase of 3.8%. This is a notable increase in health care costs and points to higher premium increases in the future.
Employers Absorb Increase
Employees did not see an increase in their contributions for 2000 despite such a significant increase in premium cost. They paid an average $28 per month for single coverage and $138 for family coverage. As well, employers facing rising health care costs did not reduce the scope of benefits covered. Both of these situations reflect a strong economy and a tight labor market.
Types of Plans
Preferred Provider Organizations (PPOs) have continued to grow and now enroll the largest number of workers at 41%. Enrollment in Health Maintenance Organizations (HMOs) is 29% and in Point of Service (POS) plans is 22%. Enrollment did not increased in either of these types of plans.
The level of benefits offered to employees remains the same this year with HMOs more than other types of plans offering preventative services such as mammograms. All plans – HMO, PPO, and POS – give prescription drug coverage with a large majority including cost sharing formulas to help cut drug costs.
Low-wage Employees have a Problem
It is good news that the number of employers offering coverage has increased. For small firms (3 – 199 employees) the number of employers offering health care benefits increased from 54% in 1998 to 67% in 2000. As in the previous year, 99% of large firms (over 200 employees) offer benefits.
But only one-third of small firms, where 35% of the employees earn less than $20,000 per year, have health insurance. The survey also showed that only 65% of employees eligible for insurance sign up in a company plan.