Insurance Premiums Soar, Outpacing Wages
Consumers paid more of the costs of their health
premiums last year, even as wages rose modestly and inflation slowed.
And things aren’t getting better in 2010.
Premiums for employer-sponsored health insurance
rose to $13,375 annually for family coverage in 2009 – with
employees on average paying $3,515 and employers, paying on average
$9,860, according to the 2009 Employer Health Benefits Survey, a joint
project of the Kaiser Family Foundation (KFF) and the Health Research
& Educational Trust (HRET).
Family premiums rose about 5 percent more than
general inflation, which fell 0.7 percent during the same period,
mostly due to falling energy prices. Worker wages increased 3.1 percent
during the same period.
"The joint survey results demonstrate the need for
comprehensive, meaningful [healthcare] reform," said Maulik S. Joshi,
Drip, DrPH president of HRET. "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."
Since 1999 health insurance premiums have risen a
total of 131 percent, far more rapidly than workers’ wages,
up 38 percent, or inflation, 28 percent. Premium increases have risen
more slowly during the past few years, compared to the double-digit
growth earlier this decade.
PPOs continue to dominate the employer market,
enrolling slightly more than 6 in 10 covered workers. HMOs cover 20
percent of workers, with an additional 10 percent in point-of-service
plans. Eight percent are enrolled in consumer-directed plans or
high-deductible plans that also include a tax-preferred savings
options, such as a health savings account or health reimbursement
The smaller the company the less likely it was to
offer health benefits, the survey found. Fewer than half, 46 percent of
the smallest employers, employing 3-9 workers, offered health benefits.
Among those businesses offering benefits, 21
percent said they reduced the scope of health benefits or increased
cost sharing due to the economic downturn, and 15 percent said they
increased the worker’s share of the premium.
The survey found that a growing number of workers
covered by their employers faced high deductibles in their plans, as
well as contributing more to the premiums for their coverage. In 2008,
22 percent of covered workers paid at least $1,000 out-of- pocket
annually for single coverage before their plan generally started to pay
a share of their healthcare bills, up from 18 percent in 2007.
When asked about their plans for 2010, 21 percent
of businesses offering coverage said they were "very likely" to raise
workers’ premium contribution, and 16 percent said they were
"very likely" to raise deductibles. Just 4 percent said they were "very
likely" to restrict eligibility for coverage while 2percent said they
were "very likely" to drop health coverage altogether.
The survey included 3,188 randomly selected,
non-federal public and private companies with three or more employees
– 2,054 of which responded to the full survey and 1,134 of
which responded to a single question about offering coverage.
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 co-payments last year was $10 for first-tier drugs, $27 for
second-tier drugs, and $46 for third-tier drugs. Co-payments for
fourth-tier drugs, which may include costly biological agents and
lifestyle drugs, averaged $85.
- Office visits. Among covered
workers with a co-payment for in-network physician office visits, the
average copayment was $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
- Health risk assessments.
Among firms offering coverage last year, 16 percent gave their
employees the option of completing a health risk assessment to help
employees identify potential health risks. Within this group, 11
percent offered financial incentives such as lowering the
worker’s share of premiums or offering merchandise, gift
cards, travel, or cash to their workers. Large firms were more likely
than small firms both to offer assessments and to offer financial
- Onsite health clinics. Among
very large firms (at least 1,000 workers), 20 percent reported that
they had 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 could have received treatment for non-work
related illness at the clinic.
- Retiree benefits. Last year
29 percent of large firms (200 or more workers) that offered health
coverage also offered retiree health benefits, similar to the 31
percent who did so in 2008 but less than half the 66 percent who did so
Addresses: Kaiser Family Foundation, 1330 G Street
NW, Washington DC 20005; (202) 347-5270, www.kff.org. Health
Research & Educational Trust, One North Franklin, 30th Floor,
Chicago, IL 60606; (312) 422.2600, www.hret.org.