Survey Employees Pay Larger Share of Health Care Costs

Average annual premiums for employer-sponsored health insurance grew just 3 percent this year for family coverage, but employees’ share of those costs surged 14 percent, according to a survey released Thursday, September 2.

The 12th annual Kaiser Family Foundation/Health Research & Educational Trust “Employer Health Benefits” survey found that employee contributions for single coverage grew 15 percent, compared with the 5 percent increase in annual employer premiums.

As a result, employees paid an average of $3,997 toward the $13,770 cost of family coverage and $899 toward the $5,059 cost of single coverage this year. By comparison, employees last year paid an average $3,515 toward the $13,275 cost of family coverage and $779 toward the $4,824 cost of single coverage.

Since 1999, the share of health care premiums paid by employees has increased 159 percent, while the cost of employer-sponsored health care benefits has grown 138 percent, according to the study.

Drew Altman, president and CEO of the Washington-based Henry J. Kaiser Family Foundation, attributed the recent surge in employee health care coverage contributions largely to the recession, saying that many employers—Kaiser included—are asking employees to take on a greater share of the health care cost burden so their firms can continue to afford to offer the coverage and perhaps avoid layoffs.

“I think it is a recession survival tactic,” he said during a Thursday news conference in Washington.

“The continued economic downturn is leading to more burden for employees in terms of what they have to pay for their health insurance,” Gary Claxton, vice president and director of the Health Care Marketplace Project at KFF, said during the news conference.

Because significant cost-sharing still is permitted under the Patient Protection and Affordable Care Act, Claxton said he expects the trend of greater health benefit cost-sharing with employees will continue in the next few years.

The survey, however, was unable to gauge the effects of PPACA on employer-sponsored health benefit costs because much of it was conducted before the reform measure became law earlier this year, he said.

While employee contributions to the cost of coverage grew significantly, the scope of that coverage eroded somewhat, Altman noted.

In particular, the percentage of employees enrolled in plans with deductibles of $1,000 or more grew to 27 percent this year from 22 percent last year, while the percentage with deductibles of $2,000 or more for single coverage grew to 10 percent this year from 7 percent last year.

“Insurance in this country is gradually changing, becoming less comprehensive, so that what workers get today is less comprehensive than what their parents got,” Altman said.

In a first during the 2010 survey, respondents were asked whether they review performance indicators on health plans’ clinical and service quality. While 34 percent of employers with 200 or more employees said they reviewed such performance indicators, only 5 percent of small employers did so.

Megan McHugh, director of research at HRET, described the numbers as “troubling.”
“Employers are not holding health plans accountable for the quality of care” their employees are receiving, McHugh said. “Firms might simply be choosing health plans based on price.”

Among other significant survey findings:
• The percentage of firms offering health care coverage grew to 69 percent in 2010 from 60 percent in 2009. The increase was the greatest among firms with three to nine workers, growing to 59 percent from 46 percent last year. While on the surface this appears to be good news, researchers said the increase was an aberration that could be attributed to the fact that only firms still in business were interviewed, and that most of those that went out of business during the recession did not offer health care coverage.

• Although preferred provider organization plans still dominate the market with 58 percent of employees enrolled in them, the percentage of employees enrolled in high-deductible health plans has grown to 13 percent in 2010 from 8 percent in 2009. Meanwhile, enrollment in health maintenance organizations shrunk slightly to 19 percent from 20 percent in 2009, while point-of-service plan enrollment fell to 8 percent from 10 percent in 2009, and traditional indemnity plan enrollment held steady at 1 percent.

• Large employers were more likely to offer high-deductible health plans, with 34 percent of firms with 1,000 or more workers offering them, compared with 21 percent of those with 200 to 999 workers and 15 percent of those with three to 199 workers. HDHPs include health plans with a deductible of at least $1,000 for single coverage and $2,000 for family coverage offered with a health reimbursement arrangement, as well as HDHPs that meet federal requirements to permit an enrollee to establish and contribute to a health savings account.

• The percentage of firms with 200 or more active workers offering retiree health benefits dropped to 28 percent in 2010 from 30 percent in 2009.

• Thirty-one percent of employers with 50 or more workers made changes to their mental health benefits in response to the Mental Health Parity and Addiction Equity Act. Of those, 66 percent eliminated limits on coverage, 16 percent increased utilization management of mental health benefits and 5 percent dropped mental health coverage entirely. Twenty-three percent of those employers made other changes that were not specified in the survey.

The survey was conducted between January and May and included responses from 3,143 randomly selected nonfederal public and private employers with three or more workers.  

Filed by Joanne Wojcik of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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