Workers paying bigger share of health costs

October 4, 2010
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The average annual premiums for employer-sponsored health insurance this year are $5,049 for single coverage and $13,770 for family coverage. That marks a 5 percent increase from 2009 for single coverage and a 3 percent hike for family coverage.

Those figures come from the 2010 Employer Health Benefits Survey, which is conducted annually by the Henry J. Kaiser Family Foundation and the Health Research and Educational Trust.

The survey also found that the annual average family premium in 2010 was 114 percent higher than in 2000, when it was $6,438. Also, the survey revealed that employer contributions to family coverage in 2010 was 103 percent higher than in 2000, while employee contributions went up by 147 percent over the same period.

This year employers are contributing an average of $9,773 to an annual premium for family coverage, compared to $4,819 in 2000, while employees are contributing an average of $3,997 for the same coverage, compared to $1,619 in 2000.

Since 2005, the average worker’s contribution has risen by 47 percent, while overall premiums have gone up by 27 percent. In comparison, employee wages have grown by 18 percent since 2005 and inflation has risen by 12 percent.

“With the economy struggling, businesses have been shifting more of the cost of health insurance to workers through premiums, deductibles and other cost-sharing,” said Drew Altman, Kaiser President and CEO.

“This may be helping to stem the rapid rise in premiums that we saw in the early 2000s, but it also means employer coverage is less comprehensive. From a consumer perspective, the cost of health insurance just keeps going up faster than wages,” added Altman.

The survey also found that many employers also have raised the annual deductibles workers must pay before their insurance begins to share costs. Twenty-seven percent of all workers now have deductibles of at least $1,000, which is up from 22 percent a year ago. At small firms — those with three to 199 workers — 46 percent of employees have annual deductibles of $1,000 or more.

The Great Recession is seen as the recent catalyst for employers placing more of the burden on workers. Thirty percent of employers said they reduced benefits or increased cost sharing, while 23 percent said they increased the amount employees pay for coverage.

“High out-of-pocket expenses and premiums affect health care decisions for patients. If premiums and costs continue to be shifted to consumers, households will face difficult choices, like foregoing needed care, or reexamining how they can best care for their families,” said HRET President Maulik Joshi, also senior vice president for research at the American Hospital Association.

In what might be seen as a surprise during a bad economy, the survey found that the percentage of businesses offering health benefits rose to 69 percent this year, up from 60 percent in 2009. Most of that increase came from the smallest of firms, those with three to nine workers. But because most employees work for larger companies, the increase did not have a major effect on the percentage of workers with health benefits and the percentage covered through employment.

“The reason for the increase is unclear,” read the survey report. “Because of the poor economic climate in 2010, it is unlikely that many firms began offering coverage this year. A possible explanation is that non-offering firms were more likely to fail during the past year, with the attrition of non-offering firms leading to a higher offer rate among surviving firms.”

Among the types of plans, only consumer-driven plans with high deductibles and tax-preferred savings options saw growth in market share. These plans now enroll 13 percent of covered workers, up from 8 percent last year.

“Consumer-driven plans have clearly established a foothold in the employer market, tripling their market share from 4 percent in 2006 to 13 percent today,” said Gary Claxton, the survey’s lead author and Kaiser vice president and director of the Healthcare Marketplace Project.

Still, 58 percent of workers are enrolled in PPOs this year, with 18 percent in HMO plans. Only 1 percent of companies offer a traditional plan.

Three other findings from the survey were:

**The average co-pay for physician office visits rose from $20 in 2009 to $22 in 2010 for primary care and from $28 to $31 for specialty care.

**Thirty-one percent of companies with more than 50 employees made changes to their mental-health benefits this year. Most eliminated coverage limits to comply with a 2008 federal law, but 5 percent dropped their mental health coverage completely.

**Seventy-four percent of employers that offer benefits now have at least one wellness program.

The annual Kaiser/HRET survey was conducted nationwide between January and May this year and included 3,143 randomly selected, non-federal public and private firms with three or more employees, with 2,046 firms responding to the full survey and 1,097 that responded to a single question about offering coverage.

The 2010 survey’s complete report can be found at www.kff.org.

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