Employer-sponsored health insurance provides coverage for 160 million Americans, reaching nearly three of every five of the nonelderly.¹ To provide current information about the nature of employer-sponsored 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.
The key findings from this year’s survey show that the rate of growth of health insurance premiums declined for the second straight year, slowing to 9.2% in 2005, and that the percentage of all firms offering health benefits to their employees has fallen significantly from 69% to 60% over the last 5 years. The 2005 findings also show growth in the percentage of firms offering health benefits that offer a high-deductible health plan (HDHP) to at least some of their employees. Twenty percent of firms that offer health benefits offer a high-deductible health plan. These firms are beginning to look at new consumer-driven arrangements. Among all firms that offer health benefits, 1.9% offer an HDHP with a health reimbursement arrangement (HRA), covering 1.6 million workers, and 2.3% offer an HDHP that meets federal requirements enabling a worker to establish a health savings account (HSA), covering 810,000 workers. | 
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Health Insurance Premiums
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| Between spring of 2004 and spring of 2005, premiums for employer-sponsored health insurance rose by 9.2%, lower than the 11.2% increase in 2004 and the 13.9% increase in 2003 (Exhibit A).² Despite this slowdown, premiums continued to increase much faster than overall inflation (3.5%) and wage gains (2.7%). Since 2000, premiums for family coverage have increased by 73%, compared with inflation growth of 14% and wage growth of 15%. Average annual premiums for employer-sponsored coverage rose to $4,024 for single coverage and $10,880 for family coverage (Exhibit B). Although the average premium increase for 2005 is 9.2%, many covered workers are in firms that experienced premium changes that were substantially above or below the average: 32% of covered workers work for firms where premiums increased by 5% or less, while 17% of covered workers work for firms where premiums increased by more than 15%. Premiums in fully insured plans and premium equivalents in self-funded plans grew at similar rates. |
Preferred provider organizations (PPOs) cover a majority of covered workers, but health maintenance organizations (HMOs) remain less expensive. The average annual PPO premium is $4,150 for single coverage and $11,090 for family coverage, compared to average annual HMO premiums of $3,767 for single coverage and $10,456 for family coverage.
Almost 80% of covered workers with single coverage, and over 90% of covered workers with family coverage make a contribution toward premiums in 2005 (Exhibit C). Workers on average contribute $610 of the $4,024 annual cost of single coverage and $2,713 of the $10,880 annual cost of family coverage (Exhibit B). Covered workers in small firms (3–199 workers) on average make a significantly higher contribution toward family coverage than covered workers in large firms (200 or more workers) ($3,170 vs. $2,487). The average percentage of premiums paid by workers is statistically unchanged over the last several years, at 16% for single coverage and 26% for family coverage (Exhibit D).
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