Increase in Cost of Employer-Sponsored Health Insurance Slows
Employer-sponsored health insurance premiums increased by an average of 6.1% in 2007, less than the 7.7% increase in 2006 but more than the 3.7% increase in employee wages and the inflation rate of 2.6%, according to the 2007 Employer Health Benefit Survey released on Tuesday by the Kaiser Family Foundation and Health Research and Educational Trust, USA Today reports (Appleby, USA Today, 9/12).
Since 2001, premiums for family coverage have increased 78%, while wages have gone up 19% and inflation is up 17% (CongressDaily, 9/11).
Between January and May, 3,078 randomly selected non-federal public and private companies with at least three employees that were surveyed by telephone; 1,997 companies responded to the full survey, and 1,081 responded to a single question about whether they offer health insurance to employees. Key findings from the survey also were published in the journal Health Affairs (Freduenheim, New York Times, 9/12).
Annual premiums for family coverage averaged $12,106 in 2007, with employees on average paying 28% of the cost, or $3,281. Employees pay 16% of the cost of premiums for single coverage, the survey found (Kaiser Family Foundation/HRET/Health Affairs joint release, 9/11).
Employees at small companies -- those with three to 199 workers -- on average pay $4,236 annually toward premiums for family coverage, compared with $2,831 for those at larger companies, according to the survey. However, the survey found that employees at small companies on average pay $561 annually for single coverage, compared with $759 for those at larger companies (Lee, Washington Post, 9/12).
The survey found that 60% of companies offer health insurance to employees, down from 69% in 2000 (Carey, CQ HealthBeat, 9/11). Ninety-nine percent of large companies offer health insurance to employees, compared with 45% of small companies, the survey found (Fuhrmans, Wall Street Journal, 9/12).
According to the survey, 5% of employees with health insurance, or about 3.8 million, were enrolled in consumer-driven plans in 2007, statistically unchanged from 4% in 2006 (Lopes, Washington Times, 9/12).
About half of those employees were enrolled in high-deductible health plans that qualify for health savings accounts, and half were enrolled in plans with health reimbursement arrangements, the survey found. The survey found that 10% of companies offer consumer-driven health plans to employees, compared with 7% in 2006, not a statistically significant difference.
Companies on average pay $7,815 toward the cost of family coverage under high-deductible plans that qualify for HSAs, including $714 for the account. They pay $10,179 toward the cost of family coverage for plans with HRAs, including an average of $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.
Companies made no contributions to the accounts of about half of all employees enrolled in high-deductible plans that qualify for HSAs for family coverage, the survey found. Among companies that do not offer consumer-driven health plans to employees, 2% say they likely will offer high-deductible plans that qualify for HSAs in 2008, and 3% likely will offer plans with HRAs, the survey found.
The survey also found:
- Among companies whose health plans include deductibles, the average annual deductible for single coverage totals $461 for PPOs, $401 for HMOs, $621 for POS plans and $1,729 for consumer-driven health plans;
- Among companies with three- and four-tiered prescription drug cost-sharing, the average copayment totals $11 for generic medications, $25 for preferred medications, $43 for nonpreferred medications and $71 for fourth-tier medications (Kaiser Family Foundation/HRET/Health Affairs joint release, 9/11);
- 47% of companies that offer health insurance to employees also offer coverage to unmarried opposite-sex domestic partners, and almost 37% offer them to same-sex partners (New York Times, 9/12);
- 57% of employees with health insurance are enrolled in PPOs, compared with 21% in HMOs, 13% in POS plans, 5% in consumer-driven health plans and 3% in conventional indemnity plans;
- 61% of companies that offer health insurance to employees allow workers to use pre-tax dollars to pay for premiums, and 22% offer flexible spending accounts, with large companies more likely than small companies to offer such benefits; and
- 21% of companies that offer health insurance to employees "very likely" will increase the amount workers pay toward premiums in 2008, and 13% "very likely" will increase copays for physician visits; 12% "very likely" will increase deductibles; and 11% "very likely" will restrict eligibility for coverage or drop coverage.
Kaiser Family Foundation President and CEO Drew Altman said, "We've seen these peaks and valleys and rates of increases before," adding, "If we take a bird's-eye view ... the overall trend is certainly going to be up" (Colliver, San Francisco Chronicle, 9/12). Altman added, "There's no question we're seeing a slow fraying of coverage in the employer-based system" (Salginik, Baltimore Sun, 9/12).
In addition, Altman said, "It's the growing anxiety on the part of the public which is moving health care up the public agenda" (Von Bergen, Philadelphia Inquirer, 9/12).
According to Gary Claxton, a vice president and director of the Health Care Marketplace Project at the Kaiser Family Foundation and a co-author of the survey, "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" (Kaiser Family Foundation/HRET/Health Affairs joint release, 9/11). Claxton said that, as the number of employees without health insurance decreases, health insurers "realize they must moderate their prices" because they are "in a fight for market share in a shrinking market" (Selvin/Costello, Los Angeles Times, 9/12).
Jon Gabel, a senior fellow at the National Opinion Research Center at the University of Chicago and a co-author of the survey, said, "Despite the economic expansion that added two million new jobs from April 2006 to April 2007, the employer-based system can do no better than tread water," adding, "It makes one ask, 'What will happen during the next economic downturn?'" (Dixon, Reuters, 9/11).
NPR's "All Things Considered" on Tuesday reported on the survey. The segment includes comments from Altman and Lavonna Clark, office manager for survey respondent Schoonover Plumbing and Heating in Pennsylvania (Silberner, "All Things Considered," NPR, 9/11). Audio and a partial transcript of the segment are available online.This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.