Economy Drives Employer Health Coverage Cutbacks

September 2, 2010 (PLANSPONSOR.com) – Driven by cost pressure from the down economy, thirty percent of employers in a new poll said they have cut their health benefits or stepped up cost-sharing, while 23% said they are asking employees to pay more for coverage.

Many employers are also raising the annual deductibles, according to the benchmark 2010 Employer Health Benefits Survey by the Kaiser Family Foundation and the Health Research & Educational Trust (HRET).   A news release about the study said a total of 27% of covered workers now face annual deductibles of at least $1,000, up from 22% in 2009.  Among small firms (3-199 workers), 46% face such deductibles.

Workers’ contributions to premiums have gone up 47% since 2005, while overall premiums rose 27%, wages increased 18%, and inflation rose 12%.

"With the economy struggling, businesses have been shifting more of the costs of health insurance to workers through premiums, deductibles and other cost-sharing," said Kaiser President and CEO Drew Altman, in the announcement. "This may 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."

The latest survey saw the percentage of firms offering health benefits in 2010 increase sharply to 69%, up from 60% in 2009, largely because of an increase in the offer rate among firms with three to nine workers, the announcement said.  Because most workers are employed by large firms, the shift among the smallest firms did not have a major effect on either the percentage of workers offered health benefits or the percentage of workers covered at their job.