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Rise in Insurance Rates Slows, Kaiser Survey Says

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Rise in Insurance Rates Slows, Kaiser Survey Says

Health Care

Rise in Insurance Rates Slows, Kaiser Survey Says

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MICHELE NORRIS, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.

MELISSA BLOCK, host:

And I'm Melissa Block.

A new survey of American businesses has what would seem to be good news about the cost of health insurance. It shows that premiums didn't go up as much as they did last year.

But as NPR's Joanne Silberner reports that headline hides some less comforting numbers.

JOANNE SILBERNER: Every year, the Kaiser Family Foundation ask 2,000 small and large businesses what they're doing about health insurance and how much it costs.

This year, businesses reported facing a 6 percent increase in health insurance premiums. That's lower than last year's 8 percent increase, and much lower than the 14 percent increase in 2003.

But it all hides another key number. Health insurance rates have gone up faster than inflation every year for the past decade. And the cumulative effect hurts, says Kaiser's Drew Altman.

Dr. DREW ALTMAN (President and CEO, Kaiser Family Foundation): Nobody is celebrating, and a moderating rate of increase doesn't feel like moderation to employers or to the working people. All they know is that it's going up this year again and it's going up more than anything else around.

SILBERNER: Much more than wages, much more than the costs of goods and services.

Still, the percentage of small and medium-sized firms offering some type of health insurance held steady from last year to this at about 60 percent, and virtually all large firms continue to offer insurance to their employees.

The survey shows no big increase in the number of workers enrolling in the new high-deductible health plans, but it does show that in the past couple of years, some companies are moving to higher premiums for higher-wage employees. Altman says it's a scramble.

Dr. ALTMAN: Employers are trying to do everything that they can but they have no single magic solution. So they're trying lots of things.

Ms. LAVONNA CLARK (Office Manager, Schoonover Plumbing and Heating): The health insurance is our major benefit, our major draw for good employees.

SILBERNER: Lavonna Clark is the office manager at Schoonover Plumbing and Heating in the little town of Canton, Pennsylvania.

The company was one of those in the survey. Clark has been there 29 years, and for the last five years or so, she's been struggling to keep health insurance costs manageable.

Ms. CLARK: Every year, for the last - since it went up to the point where we couldn't afford a major company, I go in the Internet and look for one that is comparable, that I feel the employees won't lose a lot of their benefits on, and that we could afford.

SILBERNER: She's been going for policies that have higher deductibles for hospital costs and testing.

Ms. CLARK: Four years ago, it was 250, and then I went to a 500. I am now at a 1,000. My next jump will probably be fifteen hundred.

SILBERNER: Even experts in health insurance are getting hit and are having to be creative.

Again, Drew Altman, head of the Kaiser Family Foundation.

Dr. ALTMAN: This year, we got hit with a 33 percent increase by one of our two major insurers. We had no recourse, so we switched plans and got a better rate.

SILBERNER: But Lavonna Clark of Schoonover Plumbing says switching only works for a year or so in her experience. The new insurer eventually ups the rate. She expects she'll be busy again next year trying to maintain the status quo.

Ms. CLARK: I'll just have to shop around again and we'll have to change, and it's, you know, there's a lot of paperwork to go through to do that. But we can't - it's such a little company, we can't survive if we don't keep the costs down. So I'll be back looking on the Internet.

SILBERNER: In the survey, employers said they are very or somewhat likely to increase what employees pay for their health insurance and prescription drugs next year. But they've said that even in years that they haven't made major changes.

Kaiser's Drew Altman suspects that what will really happen is that businesses will play a more active role this year in making sure this health care reform is an issue in state and national elections.

Joanne Silberner, NPR News.

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