Workers with single coverage face high-deductible plans
By TOM MURPHY
The cost of employer-sponsored health insurance rose modestly again this year, but researchers predict a return to bigger increases that may eventually produce crippling premiums if left unchecked.
Meanwhile, more workers with single coverage are facing high-deductible plans that make them pay $1,000 or more out of pocket before coverage starts, according to a report released Tuesday by the Kaiser Family Foundation and the Health Research and Educational Trust, a nonprofit research organization affiliated with the American Hospital Association.
The average annual premium — the amount charged for a fully insured policy — rose 5 percent for the third straight year to surpass $13,000 for employer-sponsored family health coverage.
Employers picked up about 74 percent of that cost, while workers paid the rest. Single coverage remained relatively flat at an average of $4,824, with employers paying 84 percent.
The 2009 increases represent much smaller growth than just a few years ago. Premiums increased anywhere from 10 percent to 13 percent from 2000 to 2004.
But the 2009 numbers still outpaced inflation, which actually fell less than 1 percent, and Kaiser CEO Drew Altman said the slower growth likely will not last.
“We’ve historically seen these peaks and valleys before, and we always have a bounce-back effect,” he said.
Experts say premium growth may be slower due to the recession and the possibility of health care reform, both of which make it harder for insurance companies to increase prices. It also may be impacted by growth in high-deductible plans, which generally come with lower premiums, and wellness programs that help employees lead healthier lifestyles in an attempt to pare medical costs.
But Altman said they haven’t seen anything meaningful done to address big drivers behind medical cost increases, like advances in expensive medical technology.
He expects premium increases to return to more typical growth of 7 percent to 9 percent annually, and that could lead to big numbers.
If annual premiums for family coverage grow by an average of 8.7 percent per year over the next decade — as they did from 1999 to 2009 — they will increase to more than $30,000, Altman predicted.
“That was a pretty shocking number,” he said. “It just underscores the urgency of reaching a stronger consensus about how we’re going to tackle the problem of health care costs.”
Premiums track directly with the cost of medical care, according to Robert Zirkelbach, a spokesman for the insurance industry trade group, America’s Health Insurance Plans, which was not involved in the study.
“In order to make health care coverage more affordable for families and small businesses, policymakers need to address the underlying cost drivers,” he said.
Congress is currently debating several bills that aim to lower costs and cover the uninsured. But benefits consultants have said that if any reform is passed this year, it won’t have a major impact for a few years.
Kaiser Family Foundation and the Health Research and Educational Trust surveyed more than 3,000 employers from January to May. Their study does not include the federal government, and it does not estimate the number of workers who lost coverage due to company cuts or closings.
It also doesn’t measure the total cost of health care to employees, a figure that would include co-payments and other expenses.
The study also found that the percentage of workers enrolled in a single-coverage plan with an annual deductible of $1,000 or more increased to 22 percent this year from 18 percent 2008. These plans offer lower premiums but generally require the person covered to pay more out of pocket before insurance coverage starts. These higher upfront costs have been shown to cause some people to skip routine care or tests.
Among companies with less than 200 workers, that percentage rose to 40 percent this year from 35 percent in 2008 and only 16 percent in 2006.
A total of 60 percent of companies surveyed in 2009 offered benefits, down from 66 percent in 1999. Only 46 percent of companies with three to nine employees offered benefits, down from 56 percent 10 years ago.
The study also reports that 21 percent of companies offering coverage reduced the scope of their benefits or increased cost sharing due to the economy. A total of 15 percent said they increased the worker’s share of the premium.
On the Net:
Kaiser Family Foundation: http://www.kff.org