Workers See Steep Increases in Deductibles

Workers are paying an average of nearly $4,000 for family health coverage — an increase of 14% compared to last year, according to a survey by the Kaiser Family Foundation and the Health Research & Educational Trust. Employees are paying quite a bit more even though premiums for family coverage rose an average of only 3% to $13,770 in 2010. The amount employers contribute for family coverage did not increase.

PPOs continue to dominate the employer market, enrolling 58% of covered workers. Average PPO family premiums topped $14,000 annually in 2010. Since 2005, workers’ contributions to premiums have gone up 47%. Since 2005 premiums rose 27%, wages rose 18%, and inflation rose 12%. Many employers are also raising the employee’s annual deductibles. Twenty-seven percent of covered workers now face annual deductibles of at least $1,000 compared to 22% in 2009. Forty-six percent of workers in small firms (3 to 199 workers) have such deductibles.

Kaiser president and CEO Drew Altman, Ph.D. said, “With the economy struggling, businesses have been shifting more of the costs of health insurance to workers through premiums, deductibles, and other cost-sharing. This can 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.” Thirty percent of employers say that, in response to the economic downturn, they reduced health benefits or increased cost sharing and 23% increased what employees pay for coverage.

Only consumer-driven plans saw growth in their market share in 2010. These high-deductible plans, which include a health savings account or health reimbursement arrangement, now enroll 13% of covered workers, up from 8% last year. “Consumer-driven plans have clearly established a foothold in the employer market, tripling their market share from 4% in 2006 to 13,” said study lead author Gary Claxton, a Kaiser vice president and director of the Healthcare Marketplace Project.

Surprisingly, the percentage of firms offering health benefits in 2010 increased sharply to 69%, up from 60% in 2009. That’s largely due to an increase in the offer rate among firms with three to nine workers. Because most workers work for large firms, the shift among the smallest firms did not have a major effect on the percentage of workers who are offered health benefits or who are covered at their job. A possible explanation is that non-offering firms were more likely to fail during the past year, leading to a higher offer rate among surviving firms. Other findings from the survey include the following:

• Single coverage — Premiums for worker-only health benefits increased 5% in 2010 to reach $5,049 annually. Workers are paying an average of $899 a year for single coverage, up from $779 in 2009. Forty-seven percent of covered workers are in single coverage plans.

• Physician office visits – The average co-payment for primary care increased from $20 to $22 for in-network physician office visits from 2009 to 2010. It increased from $28 to $31 for specialty care during the same period.

• Mental health benefits — 31% of firms with more than 50 workers made changes to mental health benefits in response to the 2008 Mental Health Parity and Addiction Equity Act. Most eliminated limits on coverage to comply with the law, though 5% dropped mental health coverage altogether.

• Wellness benefits — 74% of employers that offer health benefits offer at least one of the following wellness programs: weight loss program, gym membership discounts or on-site exercise facilities, smoking cessation program, personal health coaching, classes in nutrition or healthy living, web-based resources for healthy living, or a wellness newsletter.

• Health risk assessments — 11% of employers that offer coverage give employees the option of completing a health risk assessment. Two percent of employers offer financial incentives as part of the wellness plan, such as lowering the worker’s share of premiums or offering merchandise, gift cards, travel, or cash to their workers. Large firms are more likely to offer assessments and to offer financial incentives.

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