Economy Drives Employer Health Coverage Cutbacks

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. 

Single Employee Premiums up 5% 

The news release said study findings also included:

• Premiums for worker-only health benefits increased 5% in 2010 to $5,049 annually.  Workers on average are paying $899 annually for single coverage, up from $779 in 2009.   Forty-seven percent of covered workers are in single coverage plans.
• Among covered workers with a copayment for in-network physician office visits, the average copayment increased a small but statistically significant amount from 2009 to 2010 -- from $20 to $22 for primary care and from $28 to $31 for specialty care.
• Workers on average are paying nearly $4,000 this year toward the cost of family health coverage – a 14%-hike, or $482, above what they paid last year. The jump occurred even though the total premiums for family coverage, including what employers contribute, rose a modest 3% to $13,770 on average in 2010, the survey found.  In contrast, the amount employers contribute for family coverage did not increase. 
• Preferred Provider Organizations (PPOs) continue to dominate the employer market, enrolling 58% of covered workers.  Average PPO family premiums topped $14,000 annually in 2010.
• Among other plan types, only consumer-driven plans saw market-share growth. Such plans now enroll 13% of covered workers, up from 8% last year.
• Among firms offering coverage, 11% give their employees the option of completing a health risk assessment to help employees identify potential health risks.  Within this group, 22% -- or a relatively small 2% of all employers -- offer financial incentives such as lowering the worker’s share of premiums or offering merchandise, gift cards, travel, or cash to their workers.   

Mental Health Coverage Changes  

About three-fourths (74%) of employers offering health benefits offer at least one of the following wellness programs: weight loss program, gym membership discounts or onsite exercise facilities, smoking cessation program, personal health coaching, classes in nutrition or healthy living, Web-based resources for healthy living, or a wellness newsletter.

In response to the 2008 Mental Health Parity and Addiction Equity Act, 31% of firms with more than 50 workers made changes to the mental health benefits they offer.  Most of this group eliminated limits on coverage to comply with the law, though a small share (5% of those making changes) dropped mental health coverage altogether.

The survey is a joint project of the Kaiser Family Foundation and the Health Research & Educational Trust.  It was conducted between January and May of 2010 and included 3,143 randomly selected, non-federal public and private firms with three or more employees (2,046 of which responded to the full survey and 1,097 of which responded to a single question about offering coverage).  

More information about the survey results is at http://ehbs.kff.org/.

An Aon Consulting study released in late August found 65% of employers plan to increase health coverage cost sharing next year (see Health Cost Shifting, Sharing to Continue in 2011).