By Jonathan Block, Crain News Service
CHICAGO (Aug. 23, 2013) — Premiums paid by employers this year for their employees' family health coverage rose 4 percent.
That's a relatively modest rate by historical standards, according to a survey released Aug. 20 by the Kaiser Family Foundation. Since 2003, premiums have climbed 80 percent.
The results indicate that the U.S. is "continuing to see striking moderation in premium increases by historical standards," Kaiser President and CEO Drew Altman said in a conference call with reporters. But the Kaiser report noted that the rise in health premiums is still outpacing the rise in workers' wages and inflation, which increased by 1.8 percent and 1.1 percent, respectively, this year.
The survey, which has been published for 15 years by Kaiser in coordination with the Health Research and Education Trust, also found that a worker, on average, paid $4,565 a year toward the cost of family coverage this year, while the overall annual family premium cost is $16,351.
The survey found that 93 percent of businesses with 50 or more employees offered their workers health benefits this year. That's significant because employers with that many employees are required under the healthcare reform law to offer health benefits to employees (though that requirement has been delayed until 2015).
Gary Claxton, the study's lead investigator and director of Kaiser's Healthcare Marketplace Project, said that the delay would likely not have a major impact on premiums next year.
As to why premium increases have been relatively moderate, Altman speculated that it was likely because of a continued slowing of the economy, with Americans limiting the medical care they seek to avoid out-of-pocket costs. That's contributed to surging profits for commercial insurers.
Mr. Altman added that another reason for the moderating premiums could be the trend for employers to shift more costs onto workers in the form of higher deductibles, copays, and coinsurance.
Mr. Claxton noted that the survey results on healthcare costs did not include total out-of-pocket expenses for workers. In May, actuarial consulting group Milliman released its annual Milliman Medical Index, finding that the total cost for a family of four on a mid-level employer-sponsor plan, averaged about $22,000 this year. The index found that the worker's contribution to that figure is $9,144.
The Kaiser survey found that covered workers generally faced similar premium contributions and cost-sharing requirements in 2013 compared with 2012. But more employees are facing deductibles, with that figure rising to 78 percent of covered workers, up from 72 percent last year. While the average deductible for worker-only coverage remained relatively stable at $1,135 this year, more workers are facing higher deductibles, especially at smaller companies. For example, 58 percent of employees at small firms (up to 199 employees) now have a deductible of at least $1,000, with almost a third facing a $2,000 deductible.
Employers seem to be putting more stock in employee wellness programs. This year, 35 percent of employers said such programs are effective at controlling costs, compared with 22 percent saying that about disease management and 20 percent about consumer-driven health plan design. Of large employers—those with at least 200 employers—36 percent offered financial incentives, such as lower premiums or deductibles, to participate in a wellness program.
The Patient Protection and Affordable Care Act includes provisions that allow employers greater use of wellness program with financial incentives to drive better employee health. But Mr. Claxton said that could cause some workers to pay more for coverage if they have chronic health conditions and don't participate in such programs.
Large employers also are looking more at buying coverage through private insurance exchanges. This year, 29 percent of employers with at least 5,000 workers say they are considering these kinds of private insurance marketplaces for their employees in the future. But interest in them wanes as employee size gets smaller, with only 7 percent of employers with less than 1,000 workers considering private exchanges as an option.
This report appeared in Modern Healthcare magazine, a Chicago-based sister publication of Tire Business.