Health insurance is taking a bigger bite from workers’ wallets

Health Insurance

Workers are paying a larger share of their health insurance as companies shift more costs to their employees to survive the recession. According to a national study released Thursday, workers paid an average of 14 percent more in premiums this year while employers held their own cost increases to “a modest 3 percent.” Employees also saw out-of-pocket expenses rise with higher deductibles and co-payments. “If premiums and costs continue to be shifted to consumers, households will face difficult choices,” said Maulik Joshi, president of the Health Research & Educational Trust, which conducted the study with the Kaiser Family Foundation. The report also pointed out that “workers have little clout to demand better benefits or lower costs in the current labor environment.”

The survey-based analysis said employees with family health insurance paid an average of $3,997, or $482 more than last year. Given that the average cost for family coverage rose $495, that means employees shouldered nearly the entire increase — “a notable change from the steady share workers have paid on average over the last decade,” the report said. Meanwhile, employers paid an average of $9,773 per family policy, or $87 less than they contributed a year ago.
Kaiser chief executive Drew Altman called the cost-shifting a part of employers’ “recession survival kit.” Employers nonetheless continued to shoulder the lion’s share of health insurance costs. This year they covered 70 percent of family plan costs, compared with 74 percent last year, and 81 percent of single coverage costs, compared with 84 percent last year.

Adding up what employers and workers contributed, family coverage cost an average of $13,770, up 3 percent from last year. Total single coverage cost $5,049, up 5 percent. Since 2005, workers’ contributions to premiums have jumped 47 percent — about $1,300 — while overall premiums rose 27 percent. Meanwhile, wages grew 18 percent and overall inflation rose 12 percent, the report said. “From a consumer perspective, the cost of health insurance just keeps going up faster than wages,” Altman noted. A separate report from The Commonwealth Fund, also released Thursday, said employment-based health insurance “has eroded in the past decade, with nearly all the attrition occurring in firms with fewer than 200 employees.”

Part of that reason is the higher costs for small firms, which on average pay 18 percent more than larger employers in premiums for comparable policies, the Commonwealth Fund study said. Eric Kesselring, vice president of Axcet HR Solutions, which handles outsourced pay and benefits issues for employers, said he’s heard of premium increases as high as 30 to 40 percent, causing employers to look for savings. Among the employers surveyed for the Kaiser study — 2,046 randomly selected public and private employers with three or more workers — about seven in 10 said they offered employee health benefits. Within that group, 30 percent said they reduced health benefits or increased employee cost-sharing this year. “It just speaks to the depths of the recession and the pressure that employers have been under to hold the line on costs,” Altman said. In addition to cost-shifting, many employers are pushing wellness initiatives, such as stop-smoking programs, or providing financial incentives to employees who exercise, lose weight or participate in preventive care or disease-management programs.

This year showed a marked growth in high-deductible plans that include such options as health savings accounts or health reimbursement arrangements. Those plans enrolled 13 percent of covered workers this year, up from 8 percent in 2009. Among covered workers in all plans, three-fourths make a co-payment for doctors visits. The average co-payment for in-network physician visits rose to $22 from $20 for primary care and to $31 from $28 for specialty care. Among workers with a deductible, the average annual amount for single coverage ranged from $601 in health maintenance organizations to $675 in preferred provider organizations to $1,048 in point of service plans to $1,903 in high-deductible plans. For hospital admissions, after annual deductibles, slightly more than half of covered workers have co-insurance responsibilities.

The average co-insurance rate this year was 18 percent, with an average co-payment of $232 per admission and an average per diem charge of $228 and average separate hospital deductible of $723. The survey this year found a surprising growth in the percentage of employers that said they offered employee health benefits — 69 percent, compared with 60 percent last year. Authors of the report speculated that because most of the coverage growth occurred in organizations with three to 10 employees, the percentage rose because many of the smallest firms that didn’t offer such benefits had failed in the recession.

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