Workers Pick up the Tab for Rising Health Care Premiums in Employer-Sponsored Family Plans

Annual family health care premiums for employer-sponsored plans rose 5 percent this year to about $13,375, according to the 2009 Employer Health Benefits survey sponsored by the Kaiser Family Foundation and the Health Research & Educational Trust.  The increase came despite a nearly 1 percent drop in inflation over the same period and a smaller 3.1 percent increase in wages.  

Firms that offer health care coverage say their employees can expect more increases to their health care expenses next year.  According to the survey, 21 percent of employers who offer coverage said they are “very likely” to raise worker premiums next year and 16 percent are “very likely” to raise deductibles.  Meanwhile, 4 percent said they are “very likely” to restrict coverage eligibility and 2 percent are “very likely” to drop health care coverage altogether.

Larry McNeely, health care advocate for Public Interest Research Group (PIRG), said the survey results show that business expenses and household incomes are being devoured by health care costs, further evidence that health care reform is needed.

“Ultimately businesses, small and large, are getting killed by health care costs.  It would be short sighted to give up on the one thing that might be able to deal with this problem,” McNeely said.

According to the employers who responded to the survey, families participating in their health insurance plans will pay on average 25 percent of the total cost of the health plan, with employers picking up the rest. The employee payments average around $3,515 for the year. That’s less than a proposed fine of up to $3,800 on families who can afford health insurance but don’t buy it as outlined in Finance Committee Chairman Sen. Max Baucus’ heath care plan unveiled Wednesday.  But like other health care plans introduced by three House and one Senate committees,  America’s Healthy Future Act of 2009 limits annual out-of-pocket expenses Americans would have to pay and it removes any caps on coverage.

Still, medical debt collection firms need not be concerned about volume.

Though Baucus’ plan proposes to limit the out-of-pocket expenses on Americans making between 100-300 percent of the federal poverty level (FPL), individuals in that category still could be responsible for around $2000 a year in co-pays and deductibles.  Families with incomes between 100-300 percent of FPL could pay nearly $4000, while families with higher incomes could have out-of-pocket expenses of up to $11,900, depending on the plans they choose.  

Edmund F. Haislmaier, a senior fellow in Health Policy Studies at the Heritage Foundation said the true affordability of Baucus’ health care plan is dependent on the premiums Americans will have to pay for health insurance plans that covers everything without limits and charges no co-pays for preventative care.

“That’s the big thing that has not been (determined) in this,” Haislmaier said.

But some health policy experts say Americans already are paying more for coverage they aren’t getting.

HRET found that of the 60 percent of firms who offered insurance this year, 21 percent reduced the scope of coverage and raised the deductibles.  Fifteen percent increased the workers’ contributions towards annual premiums.             

The most noticeable change this year was the out-of-pocket expenses passed on to workers.  This year, 22 percent of workers in employer-sponsored plans are required to pay at least 1,000 annually in out of pocket expenses for single cover before their plan pays any share of the health care bill. Last year, that was the case for 18 percent of workers in employer-sponsored plans, and the case for 10 percent of workers in 2006.  HRET said most of the cutbacks this year to health coverage came from firms with 200 or more employees.

With all House and Senate committee health reform plans calling for insurance plans to provide a minimum standard of coverage, employers’ willingness  to continue to provide health insurance to their employees will factor heavily into consumers’ out-of-pocket expenses if Baucus’ proposal prevails.  It does not mandate employer coverage, though fees are imposed.