By Kaiser Family Foundation
August 20, 2013
Employer-sponsored insurance covers about 149 million nonelderly people. To provide current information about employer-sponsored health benefits, the Kaiser Family Foundation (Kaiser) and the Health Research & Educational Trust (HRET) conduct an annual survey of nonfederal private and public employers with three or more workers.
HEALTH INSURANCE PREMIUMS AND WORKER CONTRIBUTIONS
In 2013, the average annual premiums for employer-sponsored health insurance are $5,884 for single coverage and $16,351 for family coverage. The single premium is 5% higher and the family premium is 4% higher than the 2012 average premiums. During the same period workers’ wages increased 1.8% and inflation increased 1.1%.
There is significant variation around the average single and family premiums, resulting from differences in benefits, cost sharing, covered populations, and geographical location. Twenty-one percent of covered workers are in plans with an annual total premium for family coverage of at least $19,622 (120% of the average family premium), while 21% of covered workers are in plans where the family premium is less than $13,081 (80% of the average family premium).
As with total premiums, the share of the premium contributed by workers varies considerably among firms. For family coverage, 42% of covered workers are in plans that require them to make a contribution of less than or equal to a quarter of the total premium and 14% are in plans that require more than half of the premium, while only 5% are in plans that require no contribution at all for family coverage.
EMPLOYEE COST SHARING
Seventy-eight percent of covered workers have a general annual deductible for single coverage that must be met before most services are reimbursed by the plan.
Among covered workers with a general annual deductible, the average deductible amount for single coverage is $1,135.
Almost three-in-four covered workers pay a copayment (a fixed dollar amount) for office visits with a primary care physician (74%) or a specialist physician (72%), in addition to any general annual deductible their plan may have.
Most workers also face additional cost sharing for a hospital admission or an outpatient surgery episode. The average coinsurance rate for hospital admissions is 18%, the average copayment is $278 per hospital admission, the average per diem charge is $264, and the average separate annual hospital deductible is $436.
The emergence of new exchanges, or marketplaces, also may portend important changes for employer-sponsored health insurance. Through an exchange, an employer can provide employees with a larger number and type of health plan options. Exchanges also facilitate the use of defined contributions or other strategies that encourage employees to choose lower cost plans or pay the difference in costs themselves. New SHOP exchanges will offer coverage options to small employers beginning in 2014, although employee choice will be limited in the federal SHOP exchanges until 2015. Large employers have the option of offering coverage through one of several exchanges being sponsored by benefit consulting organizations. While these approaches are new and differ across different exchanges, the common theme is to devolve some benefit choices, and some of the financial responsibility for those choices, to employees. Whether this new way of purchasing coverage works for employers and their employees, and how it affects benefits and plan costs, will be among the more important stories for the employer health insurance market over the next few years.
By Don McCanne, M.D.
Many of the media reports about this annual Kaiser survey of employer-sponsored plans are expressing relief that the increases in premiums are relatively modest – only about 4 or 5 percent. But these numbers are not so reassuring when you consider that they are over twice the rate of wage increases and four time the rate of inflation. Workers continue to fall behind.
Also of concern is the fact that plans requiring high deductibles have increased and the amounts of those deductibles also have continued to increase. Thus the percentage increase in the premiums can be quite deceptive if you ignore the increase in out-of-pocket expenses that workers and their families are experiencing.
Also many employers are now considering private insurance exchanges which will allow them to convert their premium contributions into defined contributions, requiring employees to pick up the additional costs for plans that have more than minimal benefits.
Also there is considerable variation in the premiums, benefits, cost sharing, and covered populations of employer-sponsored health coverage. As if the average expenses that the employees must cover weren’t bad enough, many of them will find that the cost variations will be intolerably burdensome, even if some are better off.
These trends have been going on so long that they’ve become quite boring, but the cumulative impact on wage earners can be quite distressing. Giving a new definition to “catastrophic insurance,” the costs shifted to the workers can be catastrophic. Instead of catastrophic plans leaving people precariously exposed, what we really need is prepaid coverage that removes financial barriers to health care (i.e., single payer).