More Health Plan Changes Coming

December 20, 2007
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A national survey of employers found that quite a few will make significant changes to their health plans and benefits packages this year, and employees — especially low-wage earners — will bear the brunt of those adjustments.

Slightly more than one of five employers told the Kaiser Family Foundation and Health Research and Educational Trust, which co-conducted the survey, that they were very likely to raise their workers’ premium contribution this year. A smaller percentage said they were very likely to increase costs for office visits and prescription drug coverage, and offer plans with higher deductibles.

But very few firms reported they were very likely to restrict coverage eligibility or drop their health plans totally.

Employers are considering changes because the cost for their health plans rose by an average of 6.1 percent last year. The increase was lower than the 7.7 percent average hike that was recorded in 2006 and was the slowest rate of premium growth since 1999, when premiums rose on average by 5.3 percent.

But the 2007 increase is still higher than the 3.7 percent wage increase workers received and was more than double the 2.6 percent rise in overall inflation last year.

The survey also noted that premiums for family coverage have gone up by 78 percent just since 2001, while wages have only risen by 19 percent and inflation by 17 percent since then.

“We’re seeing some moderation in health-cost increases, but premiums for family coverage now top $12,000 annually,” said Kaiser President and CEO Drew Altman in a release.

“Every year, health insurance becomes less affordable for families and businesses. Over the past six years, the amount families pay out of pocket for their share of premiums has increased by about $1,500,” Altman added.

The survey found the average premium for family coverage reached $12,106 last year, and workers paid an average of $3,281 to cover their share.

“The number of options for low-wage earners is limited, and the greatest burden of all health care costs falls to that segment of the population,” said HRET President Mary Pittman in a statement.

“Although the economy seems to be strong, between 2005 and 2006 the total number of uninsured still rose by 5 percent, including a 9 percent increase in the number of uninsured children,” said Pittman.

Other survey findings include:

  • Covered workers, on average, paid 16 percent of the premium for single coverage and 28 percent for family coverage.

  • The average general deductible for single coverage was $461 for PPOs, $401 for HMOs, $621 for POS plans and $1,729 for consumer-driven plans.

  • The average co-payments for drug plans were $11 for generics, $25 for preferred and $43 for non-preferred drugs.

  • PPOs enrolled 57 percent of covered workers; HMOs, 21 percent; POS plans, 13 percent; consumer-driven plans, 5 percent; and conventional indemnity plans, 3 percent.

“Consumer-driven plans have established a foothold in the employer market, but they haven’t grown as much as one might think, given all the attention that they receive,” according to Kaiser Vice President Gary Claxton, co-author of the study.

The Kaiser-HRET survey was conducted between January and May of 2007 and included 3,078 randomly selected, non-federal public and private firms with three or more employees. Nearly 2,000 of those companies responded to the entire survey, while just more than 1,000 responded to a single question about offering coverage. The complete survey can be viewed at www.kkf.org.

“Despite the economic expansion that added 2 million new jobs from April 2006 to April 2007, the employer-based system can do no better than tread water,” said study co-author Jon Gabel, a senior fellow with the National Opinion Research Center at the University of Chicago.

“It makes one ask, ‘What will happen during the next economic downturn?’”     HQX

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