Employer Health Costs Rise at Moderate Clip, But Workers' Share Increasing More Quickly

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By Sean Forbes

Sept. 10 — The recent slowdown in health-care cost increases has continued in 2014, according to results of an annual survey released Sept. 10 by the Kaiser Family Foundation and the Health Research & Educational Trust.

Average annual family-coverage premiums for employer-provided plans rose 3 percent this year, to $16,834, roughly keeping track with the 2.3 percent rise in workers' wages and the 2 percent rise in general inflation, according to the report.

The average annual premium for self-only coverage is $6,025 for 2014, up 2.4 percent from a year ago, the survey found.

Premium costs rose at a fast clip from 1999 to 2004, when they increased 72 percent, but they gradually slowed in the 2004-2009 period, to 34 percent, and in the 2009-2014 period, to 27 percent, Drew Altman, president and chief executive officer of the Kaiser Family Foundation, said in a media briefing.

The annual surveys show a “pretty long-term moderation and stability in the group market and employer health-insurance coverage, including since the passage of the” Affordable Care Act, “when at least some predicted that the sky would fall,” Altman said.

However, the news isn't as good for employees.

Increases in worker contributions have outpaced the costs of coverage this year. Workers contribute an average of $4,823 toward their family coverage, up 6 percent from 2013, and $1,081 toward self-only coverage, an 8 percent increase, the survey found.

Employees also are picking up an ever-larger chunk of health-plan costs through deductibles, as the health insurance industry shifts from more comprehensive coverage to “skin-in-the-game coverage,” Altman said.

The average deductible across all companies rose 7 percent in 2014, to $1,217, and has risen 47 percent since 2009, Altman said. In smaller companies, the average deductible is even higher, at $1,797, up 5 percent from a year ago, the report said.

Kaiser and HRET surveyed by telephone 2,052 randomly selected small and large employers with at least three employees, both private and public, across the U.S. The survey uses an April-to-April time period.

Other studies have also shown a moderation in health benefits cost increases. The consulting firm Towers Watson released a survey in August showing that midsize and large employers expect a slowdown in cost increases to 4 percent in 2015, with plan design changes factored in. The National Business Group on Health earlier in August released a survey showing that employers were predicting a 5 percent rise in costs in 2015, with plan design changes taken into account.

Deductibles and Cost-Sharing

The Kaiser/HRET survey found that in 2014, about 41 percent of all covered workers carry an annual deductible of at least $1,000, a number that has continuously marched up over the years, nearly doubling from 22 percent in 2009. In 2014, 18 percent of workers face an annual deductible of at least $2,000, a number that also has steadily risen, from 7 percent in 2009.

The growth in deductibles doesn't equate to the number of employers that are picking up consumer-driven health plans (CDHPs), which rely on high deductible health plans paired with health savings accounts, said Gary Claxton, a Kaiser Family Foundation vice president and director of its Health Care Marketplace Project and co-director of its Program for the Study of Health Reform and Private Insurance.

For the past three to four years, the enrollment in CDHPs has been about 20 percent, he said.

Altman said the underlying theme is that CDHPs are “plateauing,” and that “the bigger trend is just the gradual growth of plain old vanilla high deductible plans.”

Coverage Availability

More than half of all companies, 55 percent, offer health benefits to at least some of their employees in 2014, down from 57 percent in 2013 and 61 percent in 2012, Kaiser said in the survey report.

However, an employer's size makes the difference in whether an employee is likely to receive coverage. Only 44 percent of employers with three to nine workers offer coverage, but all employers with 1,000 or more workers offer coverage to at least some of their employees, the survey report said.

Nine in 10 workers are in a company that offers health benefits to at least some of its employees, the same share as in 2013, the report said.

To contact the reporter on this story: Sean Forbes in Washington at sforbes@bna.com

To contact the editor responsible for this story: Phil Kushin at pkushin@bna.com

Text of the survey is available at http://op.bna.com/dlrcases.nsf/r?Open=kpin-9nuqy9.