Sept. 9 (Bloomberg) -- Health-insurance premiums paid by U.S. employers rose 11.2 percent this year, five times as fast as wages, according to a study that may reinforce voters' concerns over rising medical costs.

Rates have soared 59 percent since President George W. Bush took office in 2001, researchers at the Henry J. Kaiser Family Foundation and the Health Research and Educational Trust said. Health insurance now costs an average of $9,950 for families and $3,695 for individuals, the survey showed.

Workers are paying higher fees for medical care even as their wages fail to keep pace with premiums. Bush promotes an $89 billion plan that would cut health-care costs by using tax credits and limiting malpractice awards against doctors. Democratic challenger John Kerry is campaigning on a $653 billion proposal to expand government programs and help employers cover large medical claims.

``It's these out-of-pocket costs that's driving voter concern in this election,'' said Drew Altman, Kaiser's president, at a Washington news conference. ``People don't pay a percentage of GDP. They're paying real dollars.''

The increase was the fourth in a row to exceed 10 percent and followed a 13.9 percent jump in 2003. Last year's gain was the biggest since a 14 percent increase in 1990.

U.S. employers provide health-care coverage for three of every five people with insurance. Menlo Park, California-based Kaiser said 5 million U.S. workers have lost benefits since 2001 as employers decreased coverage. The U.S. Census Bureau said last month that the number of Americans without medical insurance rose by 1.4 million to a record 45 million last year.

Small Businesses

Kaiser's Altman said small businesses are bearing the brunt of the increases, affecting their ability to hire workers or offer benefits. The survey found that 63 percent of small businesses offer medical insurance, down from 68 percent three years ago. Kaiser based its findings on responses between January and May from 1,925 firms with at least three employees.

Northtowns Orthopedics, a 70-employee physician practice in the Buffalo, New York, area, has trimmed retirement benefits and pay raises to cover increased health-care costs, manager Joel Farwell said in an interview this week. Medical-insurance premiums rose 11 percent this year, Farwell said.

``Every time there's an increase, it comes right out of our bottom line,'' he said. ``Their annual raises are smaller.'' The practice pays about $8,200 for family coverage and $3,000 for individuals.

Kaiser said big companies, which typically absorb more of the expense of health benefits than small firms, also are running out of ways to attack costs. Of all businesses, 61 percent offered coverage this year, down from a peak of 65 percent in 2001.

General Motors, Ford

Health-care costs for Detroit-based General Motors Corp., the world's biggest automaker, jumped 6.7 percent to $4.8 billion last year, or $1,400 for each car and truck sold, spokesman Jerry Dubrowski said. GM's costs for 1.1 million employees, retirees and their families may exceed $5 billion this year, he said.

``We certainly don't expect the costs to fall any time soon,'' Dubrowski said. ``That just wouldn't be realistic.''

At Ford Motor Co., the Dearborn, Michigan-based No. 2 U.S. automaker, providing health benefits ``adds about $1,000 to the sticker price of each Ford car or truck built in the United States,'' said spokeswoman Marcey Evans in an e-mail. ``Our total U.S. health care bill was $3.2 billion last year for our 560,000 salaried, hourly, and retired employees and their dependents.

Starbucks, Mandalay

Starbucks Corp., the largest U.S. chain of coffee shops, with more than 8,000 stores, said Sept. 2 it will raise prices for the first time since August 2000 to cover higher costs for milk and health insurance. The company didn't say how much health-care costs have climbed.

Mandalay Resort Group, a casino operator being bought by rival MGM Mirage, said Sept. 2 that second-quarter profit was cut by 7 cents a share as health-care costs shot up 20 percent. Mandalay said costs increased because it added workers.

Pathmark Stores Inc., which owns supermarkets in the northeastern U.S., said today that higher medical costs contributed to a net loss of $1.6 million, or 5 cents a share, in its fiscal second quarter ended July 31.

Fewer workers can afford insurance even when their boss offers it, according to the Kaiser survey, which found that fees and other out-of-pocket costs borne by workers have jumped 60 percent in four years while wages rose 12 percent.

`Lousy Job Market'

``Workers don't feel like they're better off,'' Christine Owens, an AFL-CIO spokeswoman, said at the Kaiser news conference in Washington. ``Health-care costs are a major factor in what is really a pretty lousy job market.''

Workers pay an average of $558 annually for single coverage and $2,661 for family coverage, Kaiser said, and workers are shouldering about the same share of the premium over the past few years. Wages are up about 2.2 percent this year, Kaiser said, and inflation is at about 2.3 percent.

Twenty-seven percent of workers with benefits have to pay a $20 fee to see a doctor, up from 19 percent last year. Workers face average deductibles of $287 for medical care within a preferred-provider organization's network, and half face separate fees for hospital stays, the survey found.

In addition to offering more government services, Kerry, 60, a four-term Massachusetts senator, wants to make it legal for Americans to buy drugs from Canada, where price controls make costs as much as 70 percent lower than in the U.S.

Bush, 58, favors expanding health-savings accounts, wants to let companies negotiate lower rates through industry associations and would provide tax credits of $1,000 for individuals and $3,000 for families to help low-income workers buy health insurance.

No `Frontal Assault'

Kaiser's Altman said neither plan would rein in health insurers such as Aetna Inc. and drugmakers such as Pfizer Inc., which have profited as health-care spending rises.

``No candidate is proposing a frontal assault on the problem of rising health-care costs,'' he said. ``The effects of high health-care costs ripple across our entire economy.''

The government said Sept. 3 that Medicare premiums for doctor care will rise 17.4 percent and deductibles for hospital stays 4.1 percent next year, potentially affecting more than 41 million American seniors and disabled people covered by the program. Social Security income probably will increase less than 3 percent, according to the Medicare Rights Center in New York.

To contact the reporter on this story: Keith Snider in Washington at ksnider1@bloomberg.net

Last Updated: September 9, 2004 14:33 EDT