Employer-sponsored health insurance reaches more than three out of every five nonelderly Americans1. To provide current information about the nature of employer-provided health benefits, the Kaiser Family Foundation (KFF) and the Health Research and Educational Trust (HRET) conduct an annual national survey of private and public employers of three or more workers. Kaiser and HRET have been conducting the survey jointly since 1999. Prior to this, the survey was conducted by the Health Insurance Association of America (HIAA) and Bearing Point (formerly KPMG). Findings in this report draw on the 1999–2004 Kaiser/HRET Survey of Employer-Sponsored Health Benefits, the 1993, 1996, and 1998 KPMG Surveys of Employer Sponsored Health Benefits, and the 1988, 1989 and 1990 studies conducted by HIAA.
| The rate of growth of health care premiums moderated somewhat in the last year, but continues to grow at double digit rates. Perhaps reflecting several years of high premium growth and a slow economy, the survey also found that the percentage of all workers receiving health coverage from their employer fell from 65% in 2001 to 61% in 2004. As a consequence, we estimate that there are at least five million fewer jobs providing health insurance in 2004 that in 2001. A likely contributing factor is a decline in the percentage of all small firms (3-199 workers) offering health insurance over this period. In 2004, 63% of all small firms offer health benefits to their workers, down from 68% in 20012. Finally, there has been growth over the past year in the number of employers familiar with and offering consumer-directed health plan arrangements, specifically those that combine a high-deductible plan with a personal or health savings account option. Despite increased interest and knowledge about this type of plan, only a small percentage of employers currently offer a high-deductible plan with a personal or health savings account option. | 
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Health Insurance Premiums
| Between spring of 2003 and spring of 2004, premiums for employer-sponsored health insurance rose by 11.2%, lower than the 13.9% increase in 2003, but still the fourth consecutive year of double-digit growth (Exhibit A). Premiums continued to increase much faster than overall inflation (2.3%) and wage gains (2.2%). Since 2000, premiums for family coverage have increased by 59%, compared with inflation growth of 9.7% and wage growth of 12.3%. Average premium increases in 2004 are similar across firm sizes and plan types, but there is significant variability around the average: 24% of employees work for firms where premiums increased by five percent or less, while 28% of employees work for firms where premiums increased by more than 15%. Average annual premiums for employer-sponsored coverage rose to $3,695 for single coverage and $9,950 for family coverage (Exhibit B). |
Although PPOs cover a majority of covered workers, HMOs remain less expensive. Annual PPO premiums for single and family coverage are $3,808 and $10,217, respectively, compared to annual HMO premiums of $3,458 for single coverage and $9,504 for family coverage. Premiums in fully insured plans and premium equivalents in self funded plans grew at similar rates.
Next Page (Employee Contributions, Employee Cost Sharing)
1Kaiser Family Foundation, Kaiser Commission on Medicaid and the Uninsured. Health Insurance Coverage in America, 2002 Data Update, December 2003.
2The decline in the all small firm offer rate between 2001 and 2004 is significant at p<.10.
