Health Plan Premiums Rise Moderately

The weak economy, which has reduced healthcare service utilization, is cited as the leading contributor to moderate growth in health insurance premiums by the Kaiser Family Foundation in its Employer Health Benefits Survey.

Commercial payers don't make much of a scapegoat for climbing healthcare costs based on the current trajectory of health insurance premiums.

Annual premiums for employer-sponsored family health coverage increased by 4% in 2013 to $16,351, according to the 2013 Employer Health Benefits Survey released Tuesday by Kaiser Family Foundation/Health Research & Educational Trust.

Employees pay about 28% or $4,565 of the annual premium cost in 2013, up from $4,316 in 2012.

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But in describing the cost increase as "historically moderate and good news," Drew Altman, PhD, Kaiser Foundation president and CEO, added that the American people don't "ever share this sense of moderation. I think that is because over time, what people pay for healthcare has significantly eclipsed increases in their wages and inflation."

Since 2003, healthcare premiums have increased 80%, nearly three times as fast as wages (31%) and inflation (27%).

The weak economy, which has reduced healthcare service utilization, was cited as the leading contributor to the moderation in premium and healthcare costs.

And while the increase in premiums may be modest, more employers are passing along a bigger share of healthcare costs to their employees. Some 78% of employees now face an annual deductible, up from 58% in 2006. And the average deductible has almost doubled from $584 in 2006 to $1,135 in 2013.

Speaking during a press conference, Altman noted that workers in lower-wage firms are feeling the brunt of cost increases, paying $1,363 more toward family premiums than their counterparts in higher-wage firms.

For now employers' favored cost-cutting strategy involves offering wellness programs. Some 35% of respondents identified wellness programs as a "very effective" cost containment strategy. Some 99% of large firms (200 or more employees) and 76% of small firms (199 or fewer employees) offer at least one wellness program.

The most popular wellness programs for large employees are flu shots, employee assistance programs, and Web-based resources for healthy living. Some 36% of large employers and 8% of small employers offer wellness incentives.

After wellness programs, disease management was identified as an effective cost cutting strategy by 22% of respondents followed by consumer driven health plans (20%), higher employee cost sharing (17%), and tighter managed care restrictions (8%).

Other survey findings:

• The average annual premium for individual; coverage increased by 5% to$5,884 in 2013.
• The PPO was the most popular plan with 57% of the covered employees, followed by high-deductible health plans (20%), and HMOs (14%).
• Some 61% of covered workers face co-insurance if they are hospitalized; in 2013 the average co-insurance rate for a hospital admission was 18%.
• For physician office visits 74% of covered workers have a copayment for primary care physician visits, and 72% have one for specialist physician visits. The average copayment if $23 for primary care and $35 for specialty care.

Altman said the moderation in healthcare costs indicates that employers believe they don't need to do anything "radical to control costs" such as reducing worker benefits.