Annual Premiums for Family Coverage Now Average $12,106, With Workers Paying $3,281
Worker Enrollment in Consumer-Driven Health Plans Remains Modest
WASHINGTON, Sept. 11 /PRNewswire-USNewswire/ -- Premiums for employer-sponsored health insurance rose an average of 6.1 percent in 2007, less than the 7.7 percent increase reported last year but still higher than the increase in workers' wages (3.7 percent) or the overall inflation rate (2.6 percent), according to the 2007 Employer Health Benefits Survey released today by the Kaiser Family Foundation and Health Research and Educational Trust. Key findings from the survey were also published today in the journal Health Affairs.
The 6.1 percent average increase this year was the slowest rate of premium growth since 1999, when premiums rose 5.3 percent. Since 2001, premiums for family coverage have increased 78 percent, while wages have gone up 19 percent and inflation has gone up 17 percent.
The average premium for family coverage in 2007 is $12,106, and workers on average now pay $3,281 out of their paychecks to cover their share of the cost of a family policy.
"We're seeing some moderation in health-cost increases, but premiums for family coverage now top $12,000 annually," Kaiser President and CEO Drew E. Altman, Ph.D. said. "Every year health insurance becomes less affordable for families and businesses. Over the past six years, the amount families pay out of pocket for their share of premiums has increased by about $1,500."
"The number of options for low wage earners is limited and the greatest burden of all health care costs falls to this segment of the population," said Health Research and Educational Trust President Mary A. Pittman, Dr. P.H. "Although the economy seems to be strong, between 2005 and 2006 the total number of uninsured still rose by 5 percent, including a 9 percent increase in the number of uninsured children."
The annual Kaiser/HRET survey provides a detailed picture of how employer coverage is changing over time in terms of availability, costs and coverage for the 158 million people nationally who rely on employer-sponsored health insurance. It was conducted between January and May of 2007 and included 3,078 randomly selected, non-federal public and private firms with three or more employees (1,997 of which responded to the full survey and 1,081 of which responded to a single question about offering coverage).
While premiums continue to rise faster than workers' wages, this year's gap of 2.4 percentage points is much smaller than the 10.9 percentage point gap recorded four years ago, when premiums rose 13.9 percent and wages grew just 3 percent.
However, "despite the comparatively low rate of increase in premiums and a strong labor market, the percentage of the workforce obtaining coverage from employer-sponsored plans remained unchanged since 2006," reports the Health Affairs article by Kaiser's Gary Claxton and coauthors. The 60 percent of firms offering health benefits to at least some of their workers is statistically unchanged from last year's offer rate (61 percent). The offer rate remains significantly lower than it was in 2000, when 69 percent of firms offered health benefits. Nearly all (99 percent) large businesses with at least 200 workers offer health benefits to their workers this year, but fewer than half (45 percent) of the smallest firms with three to nine workers do so.
Modest Enrollment in Employer-Sponsored Consumer-Driven Plans
In spite of the extensive attention paid to consumer-driven health plans, the survey finds that these relatively new types of arrangements have made only a small inroad into the employer market. Such plans cover about 5 percent of all covered workers, which is not statistically different from the 4 percent share recorded in 2006.
Overall, an estimated 3.8 million workers are enrolled in consumer-driven plans, about equally divided between high-deductible plans that qualify for a Health Saving Account (HSA) and plans with a Health Reimbursement Arrangement (HRA). These plans feature a high-deductible plan and a tax-preferred savings option, from which employees can pay for their out-of-pocket medical expenses. Such plans are often described as consumer-driven because people pay directly for a greater share of their health care and may have an incentive to minimize its cost. They also may offer tools to help consumers choose providers based on cost and quality.
This year, 10 percent of firms offered a consumer-driven plan to their workers, which is up from (but not statistically different than) the 7 percent of firms reporting this for 2006. Firms with at least 1,000 workers are more likely to offer such plans, with nearly one in five (18 percent) offering one. Looking toward 2008, few firms that don't already offer such plans report that they are very likely to add a HRA plan (3 percent) or a HSA-qualified plan (2 percent).
Premiums for these high-deductible plans are generally lower than for other types of plans, though in addition to the premiums, employers may also contribute money to the savings accounts. The survey finds that firms on average pay a total of $7,815 toward the cost of family coverage for a HSA-qualified plan (including $714 for the account) and $10,179 toward the cost of family coverage for a high-deductible plan with a HRA (including $1,800 for the account). Compared to the $8,879 average firm contributions for other types of plans, employer contributions are lower for HSA-qualified plans and higher for plans with HRAs.
Businesses made no contribution at all to the savings account for roughly half of all workers enrolled in an HSA for family coverage, leaving workers to pay the generally higher out-of-pocket costs associated with their high-deductible plan.
"Consumer-driven plans have established a foothold in the employer market, but they haven't grown as much as one might think, given all the attention that they receive," said Kaiser Vice President Gary Claxton, co-author of the study and director of the Foundation's marketplace research.
"Despite the economic expansion that added 2 million new jobs from April 2006 to April 2007, the employer-based system can do no better than tread-water," said co-author Jon Gabel, senior fellow at the National Opinion Research Center at the University of Chicago. "It makes one ask, 'What will happen during the next economic downturn?'"
Worker Contributions and Cost-Sharing
Covered workers on average pay 16 percent of the overall premiums for single coverage and 28 percent for family coverage - shares that have remained relatively stable over the past years. However, workers in small firms (three to 199 workers) pay significantly more on average toward the cost of family coverage ($4,236 annually) compared to larger firms ($2,831 annually). For single coverage, the opposite is true, with workers at small firms annually contributing less on average than workers at large firms ($561 vs. $759).
Among firms that offer health benefits, 10 percent vary how much workers contribute based on the workers' earnings, about the same share as in 2005. About 6 percent of firms vary premium contributions based on employees' participation in wellness programs, up from 3 percent in 2005. In addition, 10 percent of firms offer financial incentives for workers to enroll in a spouse's health plan, which can reduce the firm's health care costs.
Other findings include:
-- Cost-sharing. In 2007, for firms with deductibles, the
average general annual deductible for single coverage is
$461 for PPOs, $401 for HMOs, $621 for POS plans and $1,729
for consumer-driven plans. For plans with three- or
four-tiered drug cost-sharing, the average co-payments were
$11 for generic drugs, $25 for preferred drugs, and $43 for
non-preferred drugs. Co-payments for fourth-tier drugs, which
may include costly biological agents and lifestyle drugs,
-- Domestic partner benefits. Nearly half (47 percent) of all
firms that offer health benefits make them available to
unmarried opposite-sex domestic partners, and nearly 37
percent offer such benefits to same-sex partners.
Interestingly, large firms (with at least 200 workers) were
less likely than small firms to offer domestic partner
benefits to unmarried opposite-sex partners at 28 percent.
-- Market share of health plans. Preferred Provider Organizations
continue to dominate the employer market, enrolling 57 percent
of covered workers. Health Maintenance Organizations cover
another 21 percent of workers, with 13 percent in
Point-of-Service plans, 5 percent in consumer-driven plans,
and 3 percent in conventional indemnity plans.
-- Other pre-tax benefits. Overall, 61 percent of firms that
offer health benefits allow workers to use pre-tax dollars to
pay for their share of their health premium costs. Fewer firms
(22 percent) offer a Flexible Spending Account, in which workers
can set aside pre-tax money to cover out-of-pocket health care
spending. In both cases, large firms (200 or more workers)
are far more likely to offer these benefits than smaller firms.
-- Future outlook. Many employers indicate that they expect to
make significant changes to their health plans and benefits
in 2008. Overall, 21 percent of firms say they are "very
likely" to raise workers' premium contribution next year. Some
firms also say they are "very likely" to increase office visit
cost-sharing (13 percent), increase deductibles (12 percent) and
increase prescription drug cost-sharing (11 percent). Very few
firms say they are "very likely" to restrict eligibility for
coverage or drop health coverage altogether.
The full survey, along with an audio interview with co-author Gary Claxton, is available online at http://www.kff.org/insurance/7672. The Health Affairs article based on the survey is available to subscribers at http://content.healthaffairs.org/cgi/content/abstract/26/5/1407 or via the free link at the Kaiser Web site above.
This survey is a joint project of the Kaiser Family Foundation and the Health Research and Educational Trust. A research team at Kaiser and HRET conducted and analyzed the survey, led by Gary Claxton, vice president and director of the Health Care Marketplace Project at Kaiser, and Jon Gabel, senior fellow at the National Opinion Research Center (NORC) at the University of Chicago. NORC works on the project under contract to HRET.
The Kaiser Family Foundation/Health Research and Educational Trust 2007 Annual Employer Health Benefits Survey (Kaiser/HRET) reports findings from a telephone survey of 3,078 randomly selected public and private employers, including 1,997 who responded to the full survey and an additional 1,081 who responded to one question about whether or not they provide health coverage to their employees. Kaiser/HRET drew its sample from a Survey Sampling Incorporated list of the nation's employers with three or more workers. The Kaiser/HRET Employer Benefits Survey is based on previous surveys sponsored by the Health Insurance Association of America from 1987-1990 and KPMG from 1991-1998. Researchers at the Kaiser Family Foundation, the National Opinion Research Center at The University of Chicago, and the Health Research and Educational Trust designed and analyzed the survey. National Research LLC conducted the field work between January and May 2007. The overall response rate for the survey was 49 percent. All statistical tests use the 0.05 confidence level as the threshold for significance except where otherwise noted. Beginning with the 2003 Survey, several methodological changes were made to the survey, including standardizing survey weights to U.S. Census data. Therefore, historical data in the exhibits may differ slightly from previously published estimates.
The Kaiser Family Foundation is a non-profit, private operating foundation dedicated to providing information and analysis on health care issues to policymakers, the media, the health care community, and the general public. The foundation is not associated with Kaiser Permanente or Kaiser Industries.
The Health Research and Educational Trust is a private, not-for-profit organization involved in research, education, and demonstration programs addressing health management and policy issues. Founded in 1944 as an affiliate of the American Hospital Association, HRET collaborates with health care, government, academic, business, and community organizations across the United States to conduct research and disseminate findings that help shape the future of health care.
Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears bimonthly in print with additional online-only papers published weekly as Health Affairs Web Exclusives at http://www.healthaffairs.org.
|SOURCE Kaiser Family Foundation; HRET|
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