The 2003 Annual Employer Health Benefits survey released by the Kaiser Family Foundation (KFF) and Health Research and Educational Trust (HRET) found that the premium increases represented the third straight year when the price hikes were in double digits and was the biggest advance since 1990.
As also has been widely reflected in numerous other surveys, the KFF report found that employers are passing along the higher costs to their workforce. According to KFF, the amount of the premium employees pay for family coverage has increased over the past three years almost 50% to $2,412 from $1,619. Workers now pay on average $508 per year toward the premium for single coverage. The typical family health insurance policy now costs $9,068, with employers on average paying 73% and employees paying 27%.
That trend is apparently going to continue. Many employers – particularly large companies with 200 or more workers – say that they will increase employee contributions and cost-sharing next year, but very few say that they will reduce eligibility or drop coverage. A small but significant group of employers say that they are very likely to offer a high deductible plan in the next year.
“The combination of double-digit increases in health-care costs and a weak economy means fewer jobs, lower wages, and higher health care payments for workers,” said Drew Altman, KFF president and CEO in a statement.
Survey highlights include:
- More than two in five workers face a separate deductible, copayment or coinsurance for each hospital admission- about $200 per admission.
- Nearly four in five workers face a deductible before health-care expenses are covered under their plan. For PPOs – the most common type of plan – in-network deductibles average $275 for single coverage (up $100 from three years ago). Those working for smaller firms have even higher deductibles, averaging $419. PPO deductibles for out-of-network services average $561, up 20% from last year. More than two in five, or 44%, of workers also face a separate deductible, copayment or coinsurance for hospital stays (averaging $200 per admission).
- In addition, 15% of workers were in plans that increased their out-of-pocket liability by excluding spending for certain services from the calculation of the plans’ annual out-of-pocket maximum.
- In 2003, 38% of all large firms (200 or more workers) offer retiree coverage, unchanged from last year, but down dramatically from the 66% of large firms offering coverage in 1988.
- Employers are willing to consider changes to their health plans, with 62% reporting that they shopped for a different arrangement and a third (33%) of these reporting that they either changed carriers or plan types.
- Employers, particularly larger firms, are interested in high-deductible plans (a plan with a deductible of at least $1,000 for single coverage). Some 17% of jumbo firms (5,000 or more workers) offered such a plan this year, and another 16% say they are highly likely to add such a plan next year.
- Employers were most likely to point to higher prescription drug spending (61%) as a major driving factor in the premium cost hikes. Employers also identified higher spending for hospital services (55%) as a factor in driving up premiums.
- Very few say they will reduce eligibility (10%) or drop coverage (16%).
- Consumer driven health plans were considered very effective by 14% of employers, higher cost-sharing by 10% and tighter managed care networks were considered very effective in containing costs by 6% of employers.
The survey was conducted between January and May of 2003 and included 2,808 randomly selected public and private firms ranging from three to more than 300,000 employees
For more information, go to http://www.kff.org/content/2003/20030909a .