The Annual Employer Health Benefits Survey found that 60 percent of employers provided employee health benefits in 2005, down from 66 percent in 2003 and 69 percent in 2000. While 98 percent of businesses with 200 employees or more still offered healthcare benefits, far fewer small businesses did so.

"It is low-wage workers who are being hurt the most by the steady drip, drip, drip of coverage draining out of the employer-based health insurance system," said KFF president and CEO Drew E. Altman.

Average insurance premium costs rose 9.2 percent in 2005, down from an 11.2-percent annual increase in 2004. Premium increases continued to outstrip growth in wages and the inflation rate, however, and premiums are up 73 percent since 2000.

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