Surveys: Health insurance costs shift to workers

iStockphoto

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, according to survey data released Tuesday.

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.

At the same time, the survey by the Kaiser Family Foundation 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.

Both sources point to the same fundamental long-term shift: 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.

It's a process human resources director Teresa Wilmot describes as "agonizing every time you have to do it."

In 1989, when Wilmot joined Dehen Jackets, a Portland, Ore., manufacturer of cheerleader uniforms and letterman jackets, the company offered its 80 employees complete health insurance coverage. For a monthly payment of about $40 from the worker and $130 from Dehen, the plan covered all expenses except a $10 co-pay for doctor visits.

But every year beginning in the late 1990s, Wilmot said, her insurance broker would present her with a higher premium to keep the same plan. By 2003 it became necessary to shift to a lower-priced version requiring workers to pay a percentage of their health costs up to $1,200. In 2004 Wilmot had to add a $250 deductible. Even so the plan's monthly premium topped $300.

But that was nothing compared to the premium her broker wanted to charge in 2009: "Are you sitting down?" Wilmot said. "It was $632."

Faced with increased competition from abroad, the company's workforce was already shrinking to its current size of 20, she added. "Our people couldn't afford that premium, and there was no way we as a company could absorb it either."

So Wilmot shifted to a plan with a drastically higher deductible and out-of-pocket maximum. Today they are $5,000 and $3,000, respectively. To soften the blow, the company has promised to contribute a third of that from its own funds if a worker falls sick. Still, it's been a hard series of choices for the tightknit, family-owned enterprise.

Beth Umland, Mercer's director of research for health and benefits, said it's a common conundrum for employers. "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.

Peter Cunningham, a researcher at the Center for Studying Health System Change, has found that about one in five families with employer-sponsored insurance was spending more than a tenth of its income on out-of-pocket health-care costs by 2008 (the most recent year for which those statistics were available).

Jerri Wood recently joined their ranks.

Wood, a 59-year-old married mother of three living in Renton, Wash., was diagnosed with a brain tumor in 2002 and had to undergo surgery and intense radiation treatment. As technicians for a telecommunications utility, Wood and her husband were covered by a health plan that paid nearly all the costs: Out of an $80,000 hospital bill, she estimates she paid $500 herself.

But in 2005 the company, which had previously paid workers' premiums entirely, began requiring them to contribute. For the Woods, that now adds up to about $180 month. The plan has also steadily increased the Woods' out-of-pocket obligations. Co-pays were introduced for doctors and specialists. Wood must also pay a $150 deductible for diagnostic procedures. On top of that, she faces a 10 percent co-insurance charge.

The result: The twice-annual MRIs Wood must get to monitor a section of the tumor that surgeons could not remove now cost her $1,000 apiece. Combined with other health problems she has had this year, including a throat tumor, Wood estimates her family will ultimately spend more than $6,700 on health care in 2011.

That's a challenge for a family with two children in college, a third about to start and a pretax income that has dropped to about $60,000 since Wood took early retirement to deal with her health problems.

"We didn't take a vacation this year. You cut back on gifts. You shop sales and clip coupons. . . . I didn't get a haircut for 18 months," Wood said.

"These sort of things sound like vanity," she added, her voice catching. "But if you don't look good, you don't feel good. And a lot of getting well is about attitude. . . . If you're fighting a chronic illness like this and . . . you're constantly trying to get the bills paid, well, that's really hard."

Polls suggest Wood's concerns are widely shared by Americans, about half of whom are covered by an employer-sponsored health plan. Nearly 70 percent report being worried about having to pay more for health care or health insurance. Almost a third are "very worried." And during the debate over the 2010 health-care overhaul, poll respondents consistently ranked health-care costs as the top problem with the nation's medical care system, well above the problem of the uninsured.

Yet although the new health-care law will vastly expand access to insurance for tens of millions of uninsured Americans, its impact on those already covered through an employer is either narrowly targeted or only likely to pay dividends over the long haul.

Parents can now keep their young adult children on their plans until age 26, for instance -- a provision that the Kaiser survey found has caused employers to add 2.3 million people to their rolls. (It's not known how many would have otherwise gotten insurance through other means.) New plans must also offer preventive services without cost-sharing, with one out of four people with employer-sponsored insurance gaining this benefit in 2011 as a result.

Advocates for the law also maintain that its changes to the way Medicare pays for care could ultimately encourage providers to restructure in ways that substantially slow the growth of private insurance costs as well.

Still, for the moment at least, "there's not a sense for most people that their costs and benefits will be better under the new legislation if they already have insurance," said Robert Blendon, a professor at Harvard University who monitors public views on health-care issues.

That feeling, he said, helps explain the stubborn divide in public opinion on the law, which has remained evenly split since its adoption.

[noloyalisti]

We need some serious health care reform in this country. Universal single payer (Medicare for all) is the only thing that will ensure quality care while controlling costs.

The skyrocketing health care costs in a time of recession is threatening the future of America.

[sandiegopete]

There has never been a better time for big business. Large companies are making record profits and with unemployment so high companies can cut the remuneration to employees and generate more profit due to reduced labor costs. We have a government that ignores the middle class and supports only the corporations that give money to politicians.

[noloyalisti]

It is really a sad sick country we have now. Completely run by, for and of The Corporation. We used to arrest and break up organized crime syndicates like the Mafia. Now we are one.

[tsigili]

That is only going to get worse......because of ObamaCare, which takes years to become fully effective.

Citizens have to hope that the Supreme Court, throws out the entire bill, on the grounds of Constitutionality.

[sandiegopete]

Health insurance costs have been rising steadily for the past 10 years. Employers demanding increased employee contributions is a factor of the unemployment rate which permits companies to cut the remuneration to workers on threat of termination of employment is the worker does not like it. The health insurance reform law has nothing to do with the shifting of costs to workers. The economy has everthing to do with it.

[amerilatino]

This is the country of overpricing, media manipulation and inefficiency. If you ever wonder how the middle-class survives in "lesser" countries, let me give you a little sample. In 1996 I worked for a telecom contractor and was stationed in the Dominican Republic for 3 months. I was making $3,000/mo. USD there and the exchange rate was 17 pesos to the dollar. The penthouse suite I occupied on the historic/tourist strip overlooking the hotel pool and the Caribbean cost the company $100/wk. On one remote job site we took up with some folks that leased and cooked for 3 of us for $150/wk. (the food was awesome). Once I went grocery shopping with the hostess and found that cube steak was $.75/lb., tomatoes $.30/lb., Presidente beer $.65/40oz. bottle for a six-pack. Once one of our temp riggers went into a cocaine overdose when he snuck off to do some of the local stuff, better quality than what he was used to back home; we rushed him to the hospital where they detoxed him, fed him and put him under heart observation for two days, after which the local authorities agreed not to pursue if we put him on the next plane out. The cost of his treatment to us was $175 for everything (it would have been less for a local). Taxi fare was dirt cheap, when I asked the cabbies how they could cut a profit with those big boat Cadillacs and Buicks, they smiled and showed me the LPG rigs under the hoods. They told me that they were members in a buyer coop that contracted the fuel bulk purchases and included everything from street vendors to bus drivers. I was surprised to recieve 3 job offers from local firms that worked for us, and that obtaining a job permit was such a simple affair. Although I saw that the locals made far less money and lived in a less glitzy society than their U.S. counterparts, they dressed and ate well, got reasonable healthcare for their money and seemes more optimistic about life. (You wouldn't believe how many European and North American retirees with money expat to those countries and keep it quiet, do you wonder why?)

[hairynews]

When I see posts against national healthcare, I wonder if behind those posts are politicians. Think about it, they get the best health care in the world free! Their families too. Considering congress worked only 125 days this year, THE LOWEST DAYS WORKED ON RECORD and went on vacation AGAIN! That is one sweet deal, for the rest of America, not so much. Used to be they went to the old Walter Reed and now they go to the new one that they replaced it with. Also they make 174,000 per year. Think about that when you read these posts against socialism this and that. These rich politicians who a large percentage were lawyers in private life are sure sucking at the government breast like the little piggys they are. There are over 13,000 lobbyists that represent Big Biz and have made sure that America continues to line their pockets.

[radsenior]

Paul Ryan has no inkling of how or what to do to create tax breaks for the public, but he knows how to save big insurance money! Paul Ryan has no inkling of how or what to do to create tax breaks for the public, but protecting mega-hospitals income is high on his list! Paul Ryan has no inkling of how or what to do to create tax breaks for the public, but he knows how to make sure the midle class and lower income bracket pay their full share to the government. This Yayhoo knows how the work the law to the advantage of everyone but the general public. His Terrifying Errant Activist(TEA) party credentials should make him a target for expulsion fromthe house! Paul Ryan is too lovey, lovey with Eric Cantor the author of the plan to shut down Soc ial Security, Medicare, Medicaid and FEMA at the expense of the public, while fully compensating Hospitals, Doctors and free-standing clinics.

[rightbehind]

It's time for a single payer system. Get rid of the phony baloney health care insurance markets.

[arthanyel]

formrusmcsgt - excellent example. Note mine below that costs can be double (or more) even with the current insurance and Medicare system if we would shift the focus from maximizing profit to maximizing health.

We can have better results for far less money, but it will take a major change in the entie system to make it work.

[slappy-mcjohnson]

Congrats, My Friend!

[credibility2]

As soon as the so-called healthcare reform bill was passed, I began warning others I new that employers would begin to either shift all premium costs onto their workers, or change providers that were usually more expensive, or retain the current provider and premiums going higher as a direct result of this misguided healthcare reform. Thank the president and his party for this by-product. If anything, things will get worse before getting better.

[RAS08]

So with the economy as bad as it is. Obama wants us all to dig a little deeper and pay a little more... in taxes. Does he take this shift into account also? Who but the people are expected to start up new businesses and invest at the same time? He has no clue what he is doing.

[rwsmith29456]

Even if premiums are employee based they will still go up.