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Employer Health Coverage Premiums Rise Slowly Again This Year

Source: WSJ

Posted on 20 Aug 2013 by Neilson

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health insurance premiumsPremiums for employer health coverage rose relatively slowly again this year, but the 4% increase in the cost of a family plan was still enough to push it above the $16,000 mark for the first time, according to a major survey.

The increase, to an annual total of $16,351 from $15,745 in 2012, represented the same rate of growth as last year, which likely reflects employees' continued tendency to limit their use of medical care, said Gary Claxton, vice president of the Kaiser Family Foundation. The nonprofit performed the annual poll of employers along with the Health Research & Educational Trust, a nonprofit affiliated with the American Hospital Association.

Though the survey had shown a sharper jump in 2011, the general trend in recent years has been similar to 2013, with the annual increase for family plans amounting to 3% in 2010 and 5% in each of the three previous years. Early in the previous decade, the survey showed double-digit increases. "We got used to seeing pretty big rates of growth for some years there, and not recently," said Mr. Claxton.

The cause of the relative lull in the upward march of health costs is a focus of debate among health-care economists. Some argue that it is largely an effect of the recession and its aftermath, and that the effect will likely end in tandem with a full economic rebound. But others believe that the downshift may be more tied to more permanent changes, like health plans with higher deductibles and increased efficiency among health-care providers.

Employer premiums for a single worker also grew relatively slowly in this year's survey, up about 5%, to $5,884 from $5,615.

Workers' contributions to premiums amounted to 18% of the cost for single coverage on average, and 29% of the cost for family plans. Those shares were similar to last year's.

Mr. Claxton said this year's results showed minimal impact from the federal health law. Most of its major provisions take effect next year, while some earlier parts of the law, such as the addition of children up to the age of 26 to their parents' plans, hit in previous years and have already been incorporated into the cost of coverage.

The 2013 survey found that 36% of covered workers were in plans that had been "grandfathered," or kept largely unchanged so that certain provisions of the federal law wouldn't affect them. That was down from 48% last year.

The share of firms offering health benefits was 57%, which wasn't statistically different from last year's figure of 61%.

Some employers-29% of those with 5,000 or more employees-said they were considering shifting to a new structure under which their workers would be able to select plans on an online marketplace, known as a "private exchange." Typically, this setup involves the employer allotting workers a set sum of money for health benefits, and if they pick coverage that costs more, they pay the difference.

The new survey showed that higher-deductible plans are retaining their popularity, with the share of employees enrolled in plans that have an annual deductible of $1,000 or more for single coverage hitting 38% in 2013, from 34% last year.