Health care still causing headaches

If you're having trouble keeping up with rising health care costs, you're not alone.

Industrial Distribution - November 1, 2006

Jack Keough
Editor/Associate Publisher

In the past few years, we've written a number of articles about the ways distributors and manufacturers have tried to reduce health care costs. A distributor in Las Vegas instituted a wellness plan to encourage employees to stop smoking and begin physical fitness programs. The distributor saw a substantial drop in his health insurance premiums. A manufacturer in California has done the same thing and has been pleased with the decrease in costs, as well. Other distributors have reduced coverage, switched carriers and reduced the percentage of premiums they pay.

Some of these steps have led to improved results on the health care front. A recent survey by the Kaiser Family Foundation and the Health Research and Educational Trust shows that this year has seen the slowest rate of premium growth, 7.7 percent, since 2000. The bad news is that premiums still increased more than twice as fast as workers' wages (3.8 percent) and overall inflation (3.5 percent). Premiums have increased a whopping 87 percent over the past six years.

Family health coverage now costs an average of $11,480 annually, with workers paying an average of $2,973 toward those premiums—about $1,354 more than in 2000.

Here are some of the findings from the Kaiser study:

• About 61 percent of firms offer health benefits to at least some of their workers, statistically unchanged from last year.
• On average, workers are paying $259 more in 2006 than they did last year toward the cost of family health coverage.
• Workers at small firms (3 to 199 employees) on average contribute significantly more to their premiums ($3,550) for family coverage than workers at larger companies ($2,658).
• On average, workers this year are paying about 16 percent of premiums for single coverage and 27 percent of premiums for family coverage.

The report also is expected to renew efforts by trade associations to support Small Business Health Plans. Last year, the House passed legislation that would permit trade associations and other business groups to offer these plans nationally. The legislation did not pass in the Senate. Similar legislation is expected to be introduced next year.

Meanwhile, groups such as the National Federation of Independent Business say the nation's small business owners identify the high cost of health insurance as their number one concern. And that isn't likely to change soon.