Rising Health Care Costs Outpace Wages and Inflation in US

The rising cost of health care is a burden on both employers and workers in the United States, despite a slight slowdown in premium growth this year. A nationwide survey by the Kaiser Family Foundation found that health care premiums for employer-sponsored plans rose 7.7 percent in 2006, a rate slower than the 9.2 percent growth seen in 2005. However, this increase still outpaced the 3.8 percent growth in wages and the 3.5 percent rate of inflation. The cost of health care is forcing employers to cut benefits or implement innovative methods to curb costs, with family health coverage averaging $11,480 annually and workers paying nearly $3,000 in premiums.

Key Takeaways:

• Health care premiums for employer-sponsored plans rose 7.7 percent in 2006, the slowest rate of growth since 2000.
• The increase in premiums doubled the workers' wage increase of 3.8 percent and the overall rate of inflation, which rose 3.5 percent.
• Over 155 million people in the United States are enrolled in employer-sponsored health insurance as their primary coverage.
• Technological advances and an aging population are factors causing skyrocketing health care costs.
• In 2006, family health coverage costs averaged $11,480 annually, with workers paying nearly $3,000 in premiums.
• A single plan now costs $4,242, employees paying about $50 a month.
• Smaller businesses feel the pinch of rising health care costs more than larger companies, with only 49 percent of small employers offering health benefits.
• Wellness programs have become a priority for employers, with 38 percent of employers using them to control health care costs.
• Consumer-driven health plans are not gaining traction, with only 4 percent of employees with employer-sponsored coverage enrolled in a health savings account and few employers adopting high-deductible plans.

Statistics:

• 7.7 percent: the rate of growth in health care premiums for employer-sponsored plans in 2006.
• 9.2 percent: the rate of growth in health care premiums in 2005.
• 3.8 percent: the growth in wages in 2006.
• 3.5 percent: the overall rate of inflation in 2006.
• 155 million: the number of people in the United States enrolled in employer-sponsored health insurance as their primary coverage.
• $11,480: the average annual cost of family health coverage in 2006.
• $3,000: the amount workers pay in premiums per year on average.
• $4,242: the average annual cost of a single plan in 2006.
• $50: the average monthly premium paid by employees.
• 21 percent: the percentage of employers who said their strategies for controlling health care costs included wellness programs in 2003.
• 38 percent: the percentage of employers who said their strategies for controlling health care costs included wellness programs in 2006.
• 2.7 million: the number of workers enrolled in a high-deductible plan with a savings account in 2006.
• 2.3 million: the number of workers enrolled in a high-deductible plan with a savings account in 2005.
• 2,122: the number of public and private businesses surveyed by the Kaiser Family Foundation.
• 48 percent: the response rate of the Kaiser Family Foundation survey.

Sources:

• The Kaiser Family Foundation's 2006 Employer Health Benefits Survey
• The Deloitte Center for Health Solutions' survey
• The Washington Times article "Rising health care costs outpace wages and inflation" by Gregory Lopes, THE WASHINGTON TIMES