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Health insurance premiums rise 13.9% from last year


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Survey Says Health Insurance Premiums Rose in Past Year

By Bill Brubaker

Washington Post Staff Writer

Tuesday, September 9, 2003; 9:10 AM

Health insurance premiums for American employees rose 13.9 percent during the past year, the biggest annual jump since 1990, according to a survey of employers released today in Washington.

Many employers plan to charge their employees more for health insurance benefits over the next year, the survey found. And two of every three employers are looking for alternative insurance arrangements in an effort to reduce costs.

But few employers say they will drop health insurance coverage altogether, according to the survey of 2,808 public and private employers by the Kaiser Family Foundation and the Health Research and Educational Trust. The survey examined health insurance costs between the spring of 2002 and the spring of 2003.

"A key finding, which is not entirely surprising but is still terribly important for employers and workers and the economy, is that we did not find any letup in the rate of increase of health care costs in 2003," Drew E. Altman, chief executive of the Kaiser Family Foundation, said in an interview.

"Actually, the rate of increase for premiums was a little bit higher than last year, when it was 12.9 percent. So that's bad news for employers. But it's especially bad news for working people who are again paying more."

Employers attributed the higher premiums to higher prescription drug spending, higher hospital costs and a decision by health insurers to raise premiums to boost their own profitability.

The average 13.9 percent hike marks the seventh consecutive year that premiums have increased and the third straight year of double digit increases, the survey said.

Employees also faced higher deductibles for out-of-network services in PPO (preferred provider organization) plans, higher copayments for office visits in HMO plans and higher copayments for prescription drugs, the survey reported.

And a trend toward eliminating health benefits for retirees held steady this year. The survey found that 38 percent of all large employers (200 or more workers) offered retiree health coverage this year, almost unchanged from last year's survey. In 1988, however, 66 percent of large employers offered retiree coverage.

© 2003 The Washington Post Company

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