A Sharing Of The Cost Burden

January 12, 2009
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An annual national survey of employer health benefits revealed that the average premium for family coverage through employer-sponsored health plans rose in 2008 to $12,680, up by 5 percent from 2007.

Workers enrolled in those family plans last year paid an average of $3,354, or 26 percent of the total premium. Ten years ago, the average annual employer-sponsored premium for family coverage was $5,791 and workers paid an average of $1,543 in 1999, which is also 26 percent of the total premium.

From 1999 to 2008, the average employer’s share of the total cost has gone up by 119 percent, while the average employee’s share has hiked by 117 percent — increases that are much greater than other monetary statistics. Over those same years, general inflation went up by 29 percent and workers’ wages rose by 34 percent.

But the employer-employee cost-sharing was different in 2008 for family and single-coverage plans.

The annual average premium last year for single coverage under an employer-sponsored plan was $4,704. Employers contributed $3,983, or 85 percent, to single-coverage policies last year, while workers paid $721, or 15 percent, of the premium.

These and many other findings come from the 2008 Employer Health Benefits Survey done each year by the Kaiser Family Foundation and the Health Research and Educational Trust, a national effort that interviews small and large businesses.

The report noted that deductibles rose again last year, with the average going up by about $100 to $560 in 2008. But the sticker shock for out-of-pocket costs was greater for workers in small businesses. Thirty-five percent of them had a deductible of at least $1,000 last year, an average increase of 21 percent from 2007.

“With rising deductibles, more and more people face a substantial amount out of pocket for their health care before their insurance fully kicks in,” said Drew Altman, president and CEO of Kaiser.

“Health insurance is steadily becoming less comprehensive, and it’s no wonder that in today’s tough economic climate, many families count health care costs as one of their top pocketbook issues,” he added.

Other findings from the survey include:

**Employer-sponsored insurance remains the leading source of health insurance, covering about 150 million non-elderly citizens.

**Preferred Provider Organizations continued to dominate the employer market last year by covering 58 percent of workers. Health maintenance organizations were next with 20 percent.

**The share in consumer-directed plans, high-deductible policies that include a tax-preferred savings option, rose last year to 8 percent — up from 5 percent in 2007 and 4 percent in 2006.

**Sixty-three percent of employers surveyed offered workers a health plan last year, up by 3 percent from 2007.

**Ninety-nine percent of large companies, those with 200 and more workers, offered health insurance last year — the same percentage as in 2007.

**Sixty-two percent of small companies, those with three to 199 workers, offered health insurance to their workers last year, up by 3 percent from 2007.

**Of the really small firms, those with three to nine workers, just 49 percent offered health benefits last year. Still, that number was up by 4 percent from 2007. Small companies cited high premium costs as the major reason for not offering health insurance to workers.

“Many small businesses struggle just to provide any health benefits for their workers, and when it is offered, their workers on average pay more for family coverage and face higher deductibles than those working for big employers,” said Kaiser Vice President Gary Claxton.

The annual report showed that workers employed by small firms paid $4,101 for family coverage last year, while their counterparts in large companies paid $2,982 for a family plan. Those figures show that workers at small firms paid 37 percent more for a year’s worth of family coverage than those at bigger companies did in 2008.

As for 2009, the survey revealed that 40 percent of employers are “very” or “somewhat” likely to increase the employee contribution and deductible to the company health plan. But only 6 percent of the employers said they were “very” or “somewhat” likely to drop coverage entirely this year.

Kaiser and HRET conducted the 2008 survey from January through May and included 2,832 randomly selected, non-federal public and private firms with three or more employees. The full report is available at www.kff.org

“Even modest growth in premiums and deductibles can result in financial challenges for many working families, particularly when coupled with high food and gas prices in 2008,” said John Combes, interim HRET president. “But rising health care costs are also a burden on employers, particularly small businesses.”  HQ

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