Health care premiums increase more slowly

A survey also shows that 7% of employers now offer consumer-directed health plans.

By Doug Trapp, AMNews staff. Oct. 23/30, 2006.

Washington -- Health care costs aren't increasing as fast as in years past, but they're still squeezing employers and employees alike.

For the third year in a row, the price of health insurance increased more slowly than before: 7.7% between spring 2005 and spring 2006. That's significantly slower than the 9.2% increase of spring 2005 and 11.2% increase of spring 2004, says the 2006 Kaiser Family Foundation/Health Research and Educational Trust "Employer Health Benefits 2006 Annual Survey."

But that still means health care prices climbed twice as quickly as inflation. "Insurance is still going up faster than people's paychecks," said Gary Claxton, vice president of the Kaiser Family Foundation and one of the report's co-authors. Overall, premiums have increased between 80% and 90% since 2001, Claxton said.

"It's not like we've slayed the beast," Claxton said.

The number of small businesses offering health benefits stabilized this year at 60%. That compares with 65% as recently as 2003.

The Kaiser/HRET survey also found that despite public fanfare, high-deductible plans with a savings option, such as health savings accounts, have failed to catch on widely. Only 7% of employers in 2006 offered these types of plans, compared with 6% last year. The report called that a "statistically insignificant" change.

Insurance company representatives didn't agree with that characterization of these products, known as consumer-directed health plans.