Health insurance gets costlier

By Dr. Ananya Mandal, MDSep 28 2011

According to the latest survey, premiums for employer-sponsored health insurance continued to escalate this year even as the share of workers getting less generous coverage reached a new high.

In 2011, for the first time, half of workers at small firms with individual policies faced annual deductibles of $1,000 or more. In 2006, that figure was 16 percent. At large firms, the share has grown from 6 percent to 22 percent over the same five years. The survey by the Kaiser Family Foundation also found that premiums for family plans rose 9 percent in 2011, after several years of slower annual growth. A similar recent survey by the consulting firm Mercer found that yearly premium increases have been hovering around the 6 percent mark and will grow by slightly less in 2012.

Faced with continually climbing premiums a record share of employers have moved to plans that require workers to pay more out of pocket. “Without any real national discussion or debate, there’s a quiet revolution going on in what we call health insurance in this country,” said Drew Altman, president of the Kaiser foundation, which conducted the annual survey of employers in conjunction with the Health Research & Educational Trust. “Health insurance is becoming less and less comprehensive. . . . And we expect that trend to continue.”

Employers seem to be turning to cost-shifting as an alternative to dropping coverage outright. During the first half of the decade, the share of companies offering health insurance shrank from 68 percent to 60 percent, and the figure for very small firms dropped from 58 percent to 48 percent. But since about 2005 that decline has leveled off.

Premiums paid directly by workers have galloped ahead of wage increases and inflation — rising 131 percent between 2001 and 2011 for family plans. Employer costs for those plans have gone up 113 percent over the same period, as some have asked their workers to take on a higher proportion of premium costs.

Still, employers are primarily coping with rising health-care expenses by moving their workers into plans with higher out-of-pocket costs such as deductibles, co-pays and co-insurance.

Beth Umland, Mercer’s director of research for health and benefits, said, “If the benefits are too rich, the cost of them will be high and all employees will be paying more out of their paycheck,” Umland said. With higher deductible plans, “the ones that are using the plan more will be the ones paying more.”

Nonetheless, the burden on workers and their families is becoming widespread. As premiums rise, wages are projected to increase 2.1 percent on average this year, according to the survey. The bottom line is that there is absolutely no justification whatsoever for the health insurance industry hitting employers with a 9 percent increase.