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Premiums for medical insurance rose 14% this year

As premiums rise, so do paycheck deductions, especially for family coverage. Premiums for those who have to buy their own insurance, outside of group policies, will get more outrageous. The self-employed are getting screwed. How long can we keep this up? -- Lynn
Register-Guard, Eugene
September 10, 2003

Premiums for care rose 14% this year

By Tim Christie
The Register-Guard

Health insurance premiums jumped 14 percent in 2003, the third straight year of double-digit increases and the biggest single-year rise since 1990, a new survey of employers shows.

The results, released Tuesday by the Kaiser Family Foundation and the Health Research and Educational Trust, come as no surprise to local employers and a local health insurer.

"We have experienced those kinds of increases for the last three years, and I would expect there would be another one for 2004," said Sue Kesey, co-owner of Springfield Creamery, makers of Nancy's Yogurt.

The survey found most employers aren't dropping coverage, but they are passing on higher costs to employees.

"Most employers say it's getting to be a tougher and tougher challenge," said Ken Provencher, president and CEO of Pacific Source, a Eugene-based health insurer that covers 137,000 Oregonians. "Many of them are finding it harder and harder to provide the level of coverage they've provided in the past."
Some are reducing coverage, some ask employees to contribute more, while others absorb the costs.

Springfield Creamery, which employs 48 people, mostly just eats the added expense, Kesey said.

"It feels like going backward when you have to reduce or water down what you're offering and so far we haven't done that," she said. "We just pay the bill.
"It really truly does impact our bottom line. But it's also one of the things we feel is very, very important to offer and have available so everyone is taken care of."

Driving the increases are rising hospital costs and expensive new technology, including drugs and diagnostic tools, Provencher said.

Overall, health care costs rose six times faster than estimated inflation for the rest of the economy.

The typical family premium cost $9,068 this spring, with employers paying 73 percent on average and employees paying 27 percent, according to the survey of 2,808 companies.

``I discovered that you can buy a new Hyundai Accent every year now for the average cost of a family insurance policy,'' said Drew Altman, president of the Kaiser Family Foundation. ``It's not surprising that workers feel like they're being nibbled to death by a duck by rising health care costs. This really has become a top worry for working people in America.''

The portion of the premium paid by an employee for family coverage grew 12.9 percent, to $201 a month, or $2,412 per year. Single coverage now costs about $3,383 on average annually, up from $3,060 last year. However, monthly employee contributions for single coverage increased only slightly, from $39 in 2002 to $42 this year. Employer-sponsored insurance covers about 175 million Americans
To cope with cost increases, many companies plan to impose higher deductibles and higher co-payments for prescription drugs and doctor visits, the survey found. Some companies already are cutting benefits for future retirees and forcing employees to pay more.

At Info Group Northwest, an information technology company in Eugene that employs 80 people, workers are being asked to pay more for health insurance, while some benefits have been cut back, said President Duane Daggett.

"It hurts," he said. "The first year it's tolerable, then you start doing it a second year and a third year and it hurts everybody. They're just trying to put bread on the table."

Soaring health care costs are slowing job and wage growth throughout the economy, said Helen Darling, president of the Washington Business Group on Health, which represents the health care interests of 160 large employers nationwide.

``Every time somebody walks through the door that we want to hire, off the top, we've got to pay 80 percent of their annual coverage,'' Darling said of her group's member companies. ``Add to that Medicare, Social Security taxes and workers compensation and you understand why we have a jobless recovery. It very much affects our employment situation.''

Knight-Ridder Newspapers contributed to this report

Private health insurance premiums have steadily risen.
1999: 5.3 percent
2000: 8.2 percent
2001: 10.9 percent
2002: 12.9 percent
2003: 14 percent

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