It’s a fact, health care costs continue to increase. Insurers are raising premiums while offering less comprehensive coverage. To complicate matters, many employers are putting price before quality when searching for a health plan.
By Lydell C. Bridgeford
American workers continue to see their health care costs increase, while receiving less comprehensive coverage. To complicate matters, employers are doing a lackluster job of shopping for quality health plans.
According to research by the Kaiser Family Foundation and the Health Research and Educational Trust, U.S. workers are paying, on average, about $4,000 for family health care coverage, a 14% or $482 jump from 2009 costs.
The spike occurred despite the total premiums for family coverage, which includes employer contributions, only increasing by 3% to $13,770 this year, researchers found.
Employer contributions for family coverage, however, remained steady, meaning companies are shifting more of the health care costs onto workers.
In the survey report, “2010 Employer Health Benefits Survey,” analysts also indicate that companies are raising the annual deductibles employees must pay before their health plans start to pick up the costs.
For example, a total of 27% of covered workers face annual deductibles of at least $1,000, up from 22% in 2009, according to the survey results. Among small employers with 3 to 199 workers the number rose to 46% for such deductibles.
Researchers conducted the survey between January and May of 2010. It included 3,143 randomly selected non-federal public and private employers with three or more workers. Of which 2,046 responded to the full survey and 1,097 responded to a single question about offering coverage.
“Much of the survey collection was done before the health reform law passed and most of the benefits arrangements described in the report occurred before there were any reasons to know what the health reform law would actually say,” explains Gary Claxton, vice president and director of the foundation’s health care marketplace project and the study leader author.
Still, since 2005, workers’ contributions to premiums have rose 47%, while overall premiums increased 27%, wages jumped 18%, and inflation spiked 12%.
“With the economy struggling, businesses have been shifting more of the costs of health insurance to workers through premiums, deductibles and other cost-sharing,” says Dr. Drew Altman, president and CEO at the Kaiser Family Foundation.
“This may be helping to stem the rapid rise in premiums that we saw in the early 2000s, but it also means employer coverage is less comprehensive. From a consumer perspective, the cost of health insurance just keeps going up faster than wages,” he adds.
In addition, 30% of employers admitted they reduced the scope of health benefits or increased cost sharing because of the economy.
Health plan quality
Meanwhile, the report reveals employers are not considering quality in their decision-making process on health plans.
Overall, large employers with 200 or more workers were more likely (34%) to review performance indicators on health plans than small employers with 3 to 199 workers (5%). The most common indicators used were the Consumer Assessment of Health Care Providers and System (77%) and hospital outcomes data (61%), according to the survey results.
About 75% of employers indicated that they were “somewhat satisfied” or “very satisfied” with the information available on health plan quality. However, only about 50% of firms claimed that the information was “somewhat influential” or “very influential” in their decision to select health plans.
Moreover, only six percent of employers said they review information on health plan performance, and the ones who did look at information on plan quality only half said it was influential to the their selection of a health plan, says Megan McHugh, research director at the Health Research and Educational Trust.
“With quality improvement efforts expanding and with increased focus on transparency, employers do have the ability to find data on quality of care and use it when they are comparing health plans,” says McHugh. “The lack of comparison shopping based on quality … is troubling. We are finding employers don’t hold health plans accountable for the care they offer,” she adds.
McHugh speculates that employers are choosing health plans based on price and quality might not rise to the same level of importance.
In addition, perhaps, employers are “weary of the value of quality indicators and don’t understand the indicators that are available to them. They also might believe that the quality monitors can be entrusted to others, such as the health plan and the accreditation organizations,” she explains.
Other key findings from the survey include:
- Consumer-driven plans have established a foothold in the employer market, tripling their market share from 4% in 2006 to 13% in 2010.
- Preferred provider organizations (PPOs) continue to dominate the employer market, enrolling 58% of covered workers. Average PPO family premiums topped $14,000 annually in 2010.
- Single-payer coverage increased 5% in 2010 to reach $5,049 annually. Workers on average are paying $899 annually for single coverage, up from $779 in 2009. Forty-seven percent of covered workers are in single coverage plans.
- Physician office visits: Among covered workers with a co-payment for in-network physician office visits, the average co-payment increased a small but statistically significant amount from 2009 to 2010 – from $20 to $22 for primary care and from $28 to $31 for specialty care.
- Mental health benefits: In response to the 2008 Mental Health Parity and Addiction Equity Act, 31% of firms with more than 50 workers made changes to the mental health benefits they offer. Most of this group eliminated limits on coverage to comply with the law, though a small share (5% of those making changes) dropped mental health coverage altogether.
- Wellness benefits: About three-fourths (74%) 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, 11% give their employees the option of completing a health risk assessment to help employees identify potential health risks. Within this group, 22% —or a relatively small two percent of all employers—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.