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Feb. 17, 2003: Wholesaler-Distributor Health Insurance Premiums Jump

February 17, 2003
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WASHINGTON — Data compiled by the National Association of Wholesaler-Distributors (NAW) January 17 through February 7 shows a substantial increase in group health insurance premiums paid by industry employers, says the association. Information was provided by over 460 wholesale distribution companies of all sizes and across all lines of trade, 99 percent of which offer health insurance as an employee benefit.

For the second year in a row, the average premium increase was 19 percent, according to the NAW survey. Employers with 50 and fewer employees experienced a 23 percent average hike, a three-point boost in the rate of increase these smaller employers reported in a similar NAW survey conducted last spring. Wholesaler-distributors with more than 500 employees had premium increases averaging 16 percent, a rate of increase equaling their previous year's experience.

For wholesaler-distributors with 51 to 500 employees, an 18 percent increase this year followed an average 20 percent increase last year.

A comparison of NAW's current data with that gathered in the 2002 survey shows that employees are sharing the rising premiums with their employers. Ninety-eight percent of the employer participants in the current study said that if the trend continues, workers can expect to pay more of the costs.

"Just as the results of our 2002 survey predicted, workers last year found themselves paying more out-of-pocket to meet their medical needs and those of their families. That experience and these new numbers make plain simple truths: employers simply cannot shoulder the enormous economic burden of skyrocketing health insurance premiums alone, and employees are not immune from the effects of current trends," stated Dirk Van Dongen, NAW president.

Pointing to data in the 2003 survey showing the number of wholesaler-distributors paying the full premium fell to just over 11 percent from its previous level of 14.5 percent, and further data indicating a one point reduction in the average share of premium paid by industry employers, George Valiga, NAW Service Corporation vice president and general manager, observed, "The pressure rising health insurance premiums continues to place on wholesaler-distributors' bottom lines has simply gotten too severe, and like it or not, employees have and will continue to find themselves significantly effected by the strategies embraced by their employers to ease that pressure."

"From a public policy perspective, there are a couple of things our data make painfully clear," observed Jim Anderson, the association’s vice president-government relations. "The first is that government at all levels must stop imposing cost-generating mandates on health insurance plans and the employers and workers who purchase them. Quite the opposite, employers affiliated with NAW would find it refreshing indeed were state governments and the federal government to consider scaling back mandates already enacted, both reducing government-generated, coverage-killing cost and allowing the marketplace to resolve cost and coverage issues.

"The second is the urgent need for enactment of association health plan (AHP) legislation to enable smaller employers and their employees now struggling in the small group market to benefit from greater competition and choice in the marketplace," Anderson continued. "It is among smaller employers where the uninsured problem is greatest, where the affordability problem is felt most severely, and where rising premium costs remain at their steepest. Consequently, enactment of AHP legislation would offer the prospect of real market-based solutions to a real and growing problem."

To see the complete survey report, go to www.naw.org/news/Health_Insurance.pdf.

Publication date: 02/17/2003

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