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Family Health Premiums Up 5% In 2009 as Inflation Fell Nearly 1%

Over 10 years, premiums jumped more than worker wages and general inflation

By James Limbach
ConsumerAffairs.com

September 15, 2009
Premiums for employer-sponsored health insurance rose to $13,375 annually for family coverage this year -- with employees on average paying $3,515 and employers paying $9,860, according to the 2009 Employer Health Benefits Survey released by the Kaiser Family Foundation and the Health Research & Educational Trust (HRET).

Family premiums rose about five percent this year, which is much more than general inflation (which fell 0.7 percent during the same period, mostly due to falling energy prices). Workers wages went up 3.1 percent during the same period.

Since 1999, premiums have gone up a total of 131 percent, far more rapidly than workers' wages (up 38 percent since 1999) or inflation (up 28 percent since 1999). For the past few years, the annual rise in premiums has been more moderate than the double-digit growth experienced earlier this decade.

The survey found that 60 percent of firms offer health benefits to any of their workers this year. As in the past, the smaller the firm, the less likely it is to offer health benefits -- with fewer than half (46 percent) of the smallest employers (three to nine workers) offering health benefits.

Among those firms offering benefits, 21 percent report they reduced the scope of health benefits or increased cost sharing due to the economic downturn, and 15 percent report they increased the worker's share of the premium.

"When health care costs continue to rise so much faster than overall inflation in a bad recession, workers and employers really feel the pain. That's why we are having a health reform debate," Kaiser President and CEO Drew Altman, Ph.D., said.

"Today's survey results demonstrate the need for comprehensive, meaningful reform," said Maulik S. Joshi, DrPH., president of HRET and senior vice president for research at the American Hospital Association. "Our nation faces a unique opportunity to achieve reform and build a better health care system that improves care for patients and provides coverage for all at an affordable cost."

The survey reveals that a growing number of workers who are covered by their employer are facing high deductibles in their plans in addition to contributing to the premiums for their coverage. In 2009, 22 percent of covered workers must pay at least $1,000 out of pocket annually for single coverage before their plan generally will start to pay a share of their health care bills, up from 18 percent last year and 10 percent in 2006.

The increase in covered workers with high deductibles stems from changes at large employers (200 or more workers), though workers at smaller firms remain significantly more likely to face high deductibles. Among covered workers at large firms, 13 percent now face deductibles at or above $1,000; at small firms (three to 199 workers), 40 percent face deductibles at or above $1,000-including 16 percent with deductibles at or greater than $2,000.

Preferred Provider Organizations continue to dominate the employer market, enrolling six in 10 covered workers. Health Maintenance Organizations cover 20 percent of workers, with an additional 10 percent in Point-of-Service plans, and 8 percent in consumer-directed plans, which are high-deductible plans that also include a tax-preferred savings options such as a Health Savings Account (HSA) or Health Reimbursement Arrangement (HRA).

When asked about their plans for next year, 21 percent of offering firms say they are "very likely" to raise workers' premium contribution next year, and 16 percent say they are "very likely" to raise deductibles. Just four percent say they are "very likely" to restrict eligibility for coverage, and two percent say they are "very likely" to drop health coverage altogether.

"As in the past, we're seeing many businesses struggling with ways to curb their health care costs, including offering high-deductible plans for workers, though relatively few expect to drop health benefits altogether," said Kaiser Vice President Gary Claxton, lead author of the study and director of the Foundation's marketplace research.

Other findings from the survey include:

• Drug benefits. The vast majority of covered workers face a three- or four-tier system to determine their cost-sharing for drugs. For workers in such plans, the average copayments this year are $10 for first-tier drugs, $27 for second-tier drugs, and $46 for third-tier drugs. Copayments for fourth-tier drugs, which may include costly biological agents and lifestyle drugs, averaged $85.

• Office visits. Among covered workers with a copayment for in-network physician office visits, the average copayment is $20 for primary care and $28 for specialty physicians --up slightly from the 2008 averages.

• Wellness benefits. More than half (58 percent) of employers offering health benefits offer at least one of the following wellness programs: weight loss program, gym membership discounts or on-site exercise facilities, smoking cessation program, personal health coaching, classes in nutrition or healthy living, web-based resources for healthy living, or a wellness newsletter.

• Health risk assessments. Among firms offering coverage, 16 percent give their employees the option of completing a health risk assessment to help employees identify potential health risks. Within this group, 11 percent offer financial incentives such as lowering the worker's share of premiums or offering merchandise, gift cards, travel, or cash to their workers. Large firms are more likely than small firms both to offer assessments and to offer financial incentives.

• Onsite health clinics. Among very large firms (at least 1,000 workers), 20 percent report that they have an on-site health clinic for employees at one or more locations. Of those firms with an on-site health clinic, 79 percent reported that employees can receive treatment for non-work related illness at the clinic.

• Retiree benefits. This year, 29 percent of large firms (200 or more workers) that offer health coverage also offer retiree health benefits, similar to the 31 percent who did so last year but less than half the 66 percent who did so in 1988.

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