Study: Health Insurance Cost Hikes Slowing

Sept. 11--Low-wage workers pay more for health insurance than high-wage earners, receive lower quality coverage and get less support from their employers, according to new survey on annual health care costs.

The Kaiser Family Foundation survey of more than 2,000 small and large employers nationwide also found that health costs, while rising, are going up at much smaller pace than average and dramatically slower than in previous years, likely because of the recent recession.

The survey, released Tuesday, Sept. 11, also provides several data points for analyzing the impact that the Affordable Care Act will have on costs, both for employers and their workers, as it gradually goes into effect after being approved by Congress in 2010.

Health insurance premiums grew by a relatively modest rate this year, according to the report, but the increase has proven tougher to take for workers at low-wage firms.

The average annual premium for employer-sponsored family coverage this year is $15,745, up 4 percent from last year, according to the Kaiser survey.

The rate of increase exceeded the growth in worker wages (1.7 percent) and inflation (2.3 percent) between 2011 and 2012, according to the report, but stands as one of the lowest annual growth rates for health insurance premiums since 1999.

"Double digit increases in premiums were once a common occurrence," said Drew Altman, the foundation's president, in a statement.

If workers should be cheering the relatively modest rate

of increase, the report suggests there's more applause coming from those who work at high-wage firms.

At high-wage companies -- where at least 35 percent of workers earn $55,000 or more a year -- workers this year are paying just under $4,000 each for family coverage while their employers are kicking in another $12,459.

But at low-wage firms -- defined as places where at least 35 percent of workers earn $24,000 or less per year -- employees contribute about $5,000 each for family coverage while employers are contributing an average of $9,716. Workers at low-wage firms also are more likely to face higher deductibles when seeking care.

"This year's survey suggests that working families at the low end of the wage scale face significant out-of-pocket costs for coverage," said Gary Claxton, a Kaiser researcher, in a statement. "Firms with many lower-wage workers ask employees to pay more out-of-pocket than firms with many higher-wage workers even though the coverage itself tends to be less comprehensive."

The survey also addresses the Affordable Care Act, the federal law passed to overhaul the nation's health care system.

Many requirements of the law have not yet kicked in, but one provision implemented last year called on employer health plans to allow young adults up to age 26 to be covered as dependents on their parents' health insurance. As a result, 2.9 million young adults currently are covered by employer plans, the Kaiser survey found, up from 2.3 million in 2011.

In the future, the health law will make subsidies available for lower-income people to purchase individual insurance policies on health exchanges. Small businesses also will have the change to buy coverage on exchanges, which will serve as new state-level marketplaces for buying coverage.

Larger businesses, meanwhile, will face penalties if they fail to provide employee coverage -- a requirement that creates a "pay or play" decision under which companies could decide that paying the fine is cheaper than providing coverage. The Kaiser survey found that 61 percent of firms this year are offering health benefits to their workers -- statistically unchanged from 2011.

"The percentage of firms offering health insurance and the percentage of workers covered by health insurance remained steady," researchers from Kaiser wrote in a summary of the survey's findings. "In 2012, premiums increased moderately as the economy continued to recover slowly."

Between 2002 and 2007, cumulative increases in family health insurance premiums were 51 percent, with annual growth rates reaching as high as 13 percent. Between 2007 and 2012, however, cumulative increases moderated to 30 percent, according to the new report, with the lowest annual growth rate coming in 2010 at just 3 percent, rivaled by the 4 percent increase this year.

"My sense is that the recession and slow (economic) recovery are responsible for much of the recent health spending and premium trends," said Altman, the foundation president, in a statement. "Increases in recent years in cost sharing through high-deductible plans have probably played a supporting role."

Two years ago, the Kaiser survey found that employers were passing on the bulk of premium increases to workers. But last year's report and the report released Tuesday show the trend hasn't continued.

The average worker this year is paying 28 percent of the cost for family coverage -- the same share as in 2011.

Christopher Snowbeck can be reached at 651-228-5479. Follow him at twitter.com/chrissnowbeck.

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