Employer-Based Premiums For Family Health Coverage Rise

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Employer-sponsored health insurance premiums for family coverage increased by an average of 5% in 2008 to $12,680, with more workers enrolled in high-deductible health plans, according to the 2008 Employer Health Benefit survey released on Wednesday by the Kaiser Family Foundation and Health Research and Educational Trust, McClatchy/Miami Herald reports (Pugh, McClatchy/Miami Herald, 9/24). Premiums have more than doubled since 1999 when annual premiums for family insurance averaged $5,791 (Fuhrmans, Wall Street Journal, 9/24).

Between January and May, 2,832 randomly selected, non-federal public and private firms with three or more employees were surveyed by telephone (Yee, Minnesota Star Tribune, 9/25). Of those surveyed, 1,927 companies responded to the full survey and 905 responded to a single question about offering coverage. Key findings of the survey also were published in the journal Health Affairs (Kaiser Family Foundation/HRET/Health Affairs joint release, 9/24).

Premiums, Coverage and Deductibles

Annual premiums for employer-sponsored family coverage averaged $12,680 in 2008, with employees contributing $3,354 of that cost (Colliver, San Francisco Chronicle, 9/25). Workers at small businesses -- those with between three and 199 employees -- pay $4,101 toward premiums annually for family coverage, compared with $2,982 for workers at larger firms. For single coverage, workers on average at small firms pay $624 annually, compared to $769 for single coverage at larger firms (Kaiser Family Foundation/HRET/Health Affairs joint release, 9/24). The survey found that 99% of large companies offer health benefits, compared with 62% of those with less than 200 workers and 49% of those with between three and nine workers (Freking, AP/South Florida Sun-Sentinel, 9/24). Forty-eight percent of the smallest firms that did not offer benefits cited high premiums as the most important reason (Kaiser Family Foundation/HRET/Health Affairs joint release, 9/24).

The portion of workers with deductibles of at least $1,000 increased from 12% in 2007 to 18% in 2008, according to the study (Miller, Atlanta Journal-Constitution, 9/25). Thirty-five percent of workers at small companies have health plan deductibles of at least $1,000 this year, up from 21% last year (Appleby, USA Today, 9/25). For workers in employer-sponsored preferred provider organizations -- the most common type of coverage -- deductibles increased by nearly $100 to $560 in 2008. The overall rise in deductibles can partly, but not entirely, be attributed to the rise in consumer-driven plans, such as those that qualify for a companion health savings account.

Consumer-Driven Health Plans

The portion of workers enrolled in consumer-driven health plans increased from 5% last year and 4% in 2006 to 8%, or 5.5 million workers, in 2008, the survey found. Of those enrolled in consumer-driven plans, 3.2 million are in plans that qualify for the establishment of HSAs and 2.2 million are in plans that use a health reimbursement arrangement (Kaiser Family Foundation/HRET/Health Affairs joint release, 9/24). The average deductible for consumer-driven plans is $2,010 for single coverage for HSA-qualified plans and $1,552 for HRAs.

The increase in the number of workers enrolled in consumer-driven health plans was driven largely by small businesses, where the percentage of workers in these plans increased to 13% from 8% last year. In companies with more than 200 employees, 5% are enrolled in such plans -- statistically unchanged from 2007 (Carey, CQ HealthBeat, 9/24). Companies on average pay a total of $8,291 annually toward family coverage in an HSA-qualified plan, including a $1,522 contribution to the account, compared with $9,495 paid toward family coverage in non-consumer-directed plans (Kaiser Family Foundation/HRET/Health Affairs joint release, 9/24). Sixty percent of firms offering such plans say the main reason is cost, and more than 40% reported cost savings as the most successful result of the plans (Carey, CQ HealthBeat, 9/24).

The survey also found that:

* More than half of all companies offering coverage also provide at least one of seven wellness programs, including weight loss programs, gym membership discounts or an on-site exercise facility, smoking cessation programs, personal health coaching, classes in nutrition or healthy living, Web-based resources for health living, or a wellness newsletter (Powell, Akron Beacon Journal, 9/25);

* Most plans have a three- or four-tier system for determining the amount workers pay for prescriptions. The average copayment is $10 for the first tier, $26 for the second tier, $46 for the third tier and $75 for the fourth tier, which can include costly biological agents and lifestyle drugs (Kaiser Family Foundation/HRET/Health Affairs joint release, 9/24);

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* When asked about plans for the coming year, 14% of companies say they are "very likely" to raise workers' premium contributions, and 12% say they are "very likely" to restrict eligibility for coverage or eliminate coverage altogether (McClatchy/Miami Herald, 9/24); and

* 31% of large companies offered retiree health benefits in 2008 -- similar to last year but less than half of the 66% that did so in 1988 (Stafford, Kansas City Star, 9/24).

Comments

Kaiser Family Foundation President and CEO Drew Altman said, "The problems people are having paying for health care and health insurance are a central dimension of the economic pocketbook concerns right now" (Abelson, New York Times, 9/24). He added, "We may be seeing the tip of the iceberg of a trend towards less comprehensive, skimpier insurance with higher out-of-pocket payments for working people. That's bad news at a time when workers are being hit by other economic pressures from declining 401(k)s to higher food and gas prices and problems paying the rent and mortgage" (McClatchy/Miami Herald, 9/24). "I do think part of it is that we're in a period where people are paying more of the bill and also at the same time are being hit with other economic shocks," he said, adding, "That curbs their use of health care" (Manthey, Arkansas Democrat-Gazette, 9/25). The proposed bailout of Wall Street firms could affect the chances that federal action will be taken to overhaul the health coverage system, according to Altman. He said, "The bailout makes it so much tougher" (Von Bergen, Philadelphia Inquirer, 9/25).

In a release, HRET interim President John Combes said, "Even modest growth in premiums and deductibles can result in financial challenges for many working families, particularly when coupled with high food and gas prices in 2008."

Survey co-author Gary Claxton, a Kaiser Family Foundation vice president and director of the Foundation's Health Care Marketplace Project, said, "It's possible that the premiums aren't reflecting what they think their actual costs are at the moment," adding, "There's going to be a little bit of pressure on them probably to raise premiums to do something about their revenues." According to Claxton, "We're at a time when health care plans have been competing for market share," and recently "we haven't seen any new blockbuster drugs that are paid for by insurance" (Arkansas Democrat-Gazette, 9/25).

The survey "makes it clear the cost of doing nothing is high and growing," Len Nichols, a health economist at the New America Foundation, said (New York Times, 9/24).

America's Health Insurance Plans President Karen Ignagni said that "the slowing rate of growth in health insurance premiums shows we are moving in the right direction, but much more needs to be done to make health care coverage more affordable for consumers and employers."

House Ways and Means Health Subcommittee Chair Pete Stark (D-Calif.) said, "Unless we enact significant reforms, people will continue to fall through the cracks of insurance company rules, employers will continue to drop coverage, and out-of-pocket costs will continue to rise faster than wages. Until we have universal coverage, these cost shifts away from insurers to consumers will continue" (Carey, CQ HealthBeat, 9/24).

HSC Study

In related news, a study released by the Center for Studying Health System Change, based on a nationwide survey of households, found that nearly one in five families had problems paying medical bills last year. More than half of those families said they borrowed money to pay health care expenses, and almost 20% of those having trouble paying said they considered declaring personal bankruptcy as a result, according to the study (New York Times, 9/24). The study found that 57 million U.S. residents are in families that struggle to pay medical bills, and 42.5 million of those people have health insurance.

Peter Cunningham, an HSC senior fellow, said, "Increases in problems paying bills are affecting not only those who have always struggled with medical costs -- low-income and uninsured people -- but also an increasing number of insured middle-income families" (Jha, CQ HealthBeat, 9/24). Karen Davis, president of the Commonwealth Fund, which funded the study, said, "It's hitting both the insured and the uninsured, and it's hitting middle-class families" (New York Times, 9/24).

Reprinted with permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign up for email delivery at kaisernetwork.org/email . The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation. © 2007 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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