Health Benefits In 2012: Moderate Premium Increases For Employer-Sponsored Plans; Young Adults Gained Coverage Under ACA

By Gary Claxton, Matthew Rae, Nirmita Panchal, Anthony Damico, Heidi Whitmore, Kevin Kenward and Awo Osei-Anto
Health Affairs, September 2012 (online)

Health care premiums rose moderately for single and family employer-sponsored coverage this year, the 2012 annual Kaiser Family Foundation/Health Research and Educational Trust (HRET) Survey of Employer Health Benefits found.

In 2012 the average annual premium cost was $5,615 for single health coverage and $15,745 for family coverage. The average premiums were about 3 percent higher for single coverage and 4 percent higher for family coverage than in 2011. During the same period, general inflation was 2.3 percent, and wages rose by 1.7 percent.

There continue to be important differences between the health benefits offered by small and large firms. Workers at small firms (those with 3–199 workers) face higher cost sharing, including higher copayments for office visits and higher general annual deductibles for single coverage. These workers are also responsible for a larger premium contribution for family coverage than are workers at large firms (those with 200 or more workers).

Compared to workers in large firms, workers in small firms have a slightly lower average percentage contribution for single coverage but a far higher average percentage contribution for family coverage.

Workers in firms with a large share of lower-wage workers face higher contributions for family coverage than workers in firms with a small share of lower-wage workers.

The enrollment distribution varies by employer size, with preferred provider organizations being relatively more popular among large firms, and point-of-service plans and high-deductible plans with a savings option being relatively more popular among small firms.

Looking across all plan types, 49 percent of workers in small firms and 26 percent of workers in large firms are in a plan with a general annual deductible of at least $1,000.

The largest firms are much more likely than the smallest firms to offer health benefits: Virtually all firms with more than 5,000 workers offer benefits to at least some of their employees, whereas only half of firms with 3–9 workers do so. Firms with a smaller percentage of lower-income workers are more likely to offer coverage than firms with a larger percentage of those workers.

An employer-sponsored health plan can be grandfathered if it provided coverage to a worker when the act became law and if the plan does not make major changes that reduce benefits or increase employee costs.

From the Conclusion

There are important differences between the health plans being offered at small firms and those offered at large firms. Although the average family premium is lower at small firms than at large firms, workers at small firms are often responsible for paying a larger share of the premium than workers in large firms. Also, workers at small firms typically face higher cost sharing and out-of-pocket maximums—which means that in addition to higher premium contributions, they are also left with a higher financial burden when using services.

The Affordable Care Act was designed to perpetuate as much as possible enrollment in employer-sponsored plans. This study demonstrates that lower-income workers face greater out-of-pocket costs through a higher share of premiums and through greater deductibles and other cost sharing, especially if they are employed by a small firm. Private employer-sponsored plans do not serve well the needs of workers with lower incomes.

An improved Medicare for everyone would resolve these differences.