Monday, September 17, 2012

Fwd: qotd: Lower wage employees have greater out-of-pocket expenses

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Subject: qotd: Lower wage employees have greater out-of-pocket expenses
Date: Mon, 17 Sep 2012 11:32:15 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

Health Affairs
September 2012 (online)
Health Benefits In 2012: Moderate Premium Increases For
Employer-Sponsored Plans; Young Adults Gained Coverage Under ACA
By Gary Claxton, Matthew Rae, Nirmita Panchal, Anthony Damico, Heidi
Whitmore, Kevin Kenward and Awo Osei-Anto

Health care premiums rose moderately for single and family
employer-sponsored coverage this year, the 2012 annual Kaiser Family
Foundation/Health Research and Educational Trust (HRET) Survey of
Employer Health Benefits found.

In 2012 the average annual premium cost was $5,615 for single health
coverage and $15,745 for family coverage. The average premiums were
about 3 percent higher for single coverage and 4 percent higher for
family coverage than in 2011. During the same period, general inflation
was 2.3 percent, and wages rose by 1.7 percent.

There continue to be important differences between the health benefits
offered by small and large firms. Workers at small firms (those with
3–199 workers) face higher cost sharing, including higher copayments for
office visits and higher general annual deductibles for single coverage.
These workers are also responsible for a larger premium contribution for
family coverage than are workers at large firms (those with 200 or more

Compared to workers in large firms, workers in small firms have a
slightly lower average percentage contribution for single coverage but a
far higher average percentage contribution for family coverage.

Workers in firms with a large share of lower-wage workers face higher
contributions for family coverage than workers in firms with a small
share of lower-wage workers.

The enrollment distribution varies by employer size, with preferred
provider organizations being relatively more popular among large firms,
and point-of-service plans and high-deductible plans with a savings
option being relatively more popular among small firms.

Looking across all plan types, 49 percent of workers in small firms and
26 percent of workers in large firms are in a plan with a general annual
deductible of at least $1,000.

The largest firms are much more likely than the smallest firms to offer
health benefits: Virtually all firms with more than 5,000 workers offer
benefits to at least some of their employees, whereas only half of firms
with 3–9 workers do so. Firms with a smaller percentage of lower-income
workers are more likely to offer coverage than firms with a larger
percentage of those workers.

An employer-sponsored health plan can be grandfathered if it provided
coverage to a worker when the act became law and if the plan does not
make major changes that reduce benefits or increase employee costs.

From the Conclusion

There are important differences between the health plans being offered
at small firms and those offered at large firms. Although the average
family premium is lower at small firms than at large firms, workers at
small firms are often responsible for paying a larger share of the
premium than workers in large firms. Also, workers at small firms
typically face higher cost sharing and out-of-pocket maximums—which
means that in addition to higher premium contributions, they are also
left with a higher financial burden when using services.

Comment: The Affordable Care Act was designed to perpetuate as much as
possible enrollment in employer-sponsored plans. This study demonstrates
that lower-income workers face greater out-of-pocket costs through a
higher share of premiums and through greater deductibles and other cost
sharing, especially if they are employed by a small firm. Private
employer-sponsored plans do not serve well the needs of workers with
lower incomes.

An improved Medicare for everyone would resolve these differences.

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