Health Insurance: Good News, Bad News

The good news is health insurance premiums are increasing at a lower rate across the United States. The bad news is health insurance premiums are still increasing. In the United States, the average health insurance premium increased by 11.6 percent this past year. According to the Compensation Data annual survey of more than 5,300 employers, this is down from 12.3 percent last year and 14.7 percent in 2004.

HMO, PPO and POS plans had close to the same increase, around 11.5 percent, leaving employers with a variety of options. The bad news for employees is with 73.5 percent of employers paying between 70 and 99 percent of their employeesí health care premiums, companies have engaged in cost-saving activities, such as increasing cost-sharing, deductibles and co-insurance amounts and decreasing the benefits offered. In fact, 40.8 percent of U.S. companies increased the employeeís portion of the health premium, 29.6 percent increased deductible levels and 7.2 percent reduced benefits offered in an effort to save on health care costs.

Employers, who have refrained from cost-sharing or decreasing benefits over the past couple of years, are the exception, not the rule, said Amy Kaminski, manager of marketing programs for Compdata Surveys. But, companies understand the financial burden this places on its employees and are turning to alternative methods such as encouraging healthy lifestyles in order to control costs.

In a recent poll on Compdata Surveysí Web site, www.compdatasurveys.com, 40 percent of respondents said they have plans to expand their current wellness program in the next 12 months. More companies are attempting to control health care costs with prevention in the hopes of lowering costs for all employees. Some of the new tactics include providing on-site fitness facilities, physicians and pharmacies. Companies are also providing education on healthy eating habits and decreased reliance on unhealthy habits, such as smoking, to help employees take control of their health.

Cost of Benefits
U.S. employers are spending an average of 20 percent of their total payroll dollars on voluntary benefits. Almost half of this amount (10 percent) is spent on health insurance alone, while 4.5 percent is spent on pension plans and 3.3 percent is spent on other non-mandated benefits. In addition, 1.4 percent is spent on dental insurance, 0.9 percent on disability insurance and 0.8 percent on life insurance.