Wednesday, August 21, 2013

Fwd: qotd: Modest premium increases hide important part of story

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Subject: qotd: Modest premium increases hide important part of story
Date: Wed, 21 Aug 2013 12:47:52 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

Kaiser Family Foundation
August 20, 2013
2013 Employer Health Benefits Survey

Employer-sponsored insurance covers about 149 million nonelderly people.
To provide current information about employer-sponsored health benefits,
the Kaiser Family Foundation (Kaiser) and the Health Research &
Educational Trust (HRET) conduct an annual survey of nonfederal private
and public employers with three or more workers.


In 2013, the average annual premiums for employer-sponsored health
insurance are $5,884 for single coverage and $16,351 for family
coverage. The single premium is 5% higher and the family premium is 4%
higher than the 2012 average premiums. During the same period workers'
wages increased 1.8% and inflation increased 1.1%.

There is significant variation around the average single and family
premiums, resulting from differences in benefits, cost sharing, covered
populations, and geographical location. Twenty-one percent of covered
workers are in plans with an annual total premium for family coverage of
at least $19,622 (120% of the average family premium), while 21% of
covered workers are in plans where the family premium is less than
$13,081 (80% of the average family premium).

As with total premiums, the share of the premium contributed by workers
varies considerably among firms. For family coverage, 42% of covered
workers are in plans that require them to make a contribution of less
than or equal to a quarter of the total premium and 14% are in plans
that require more than half of the premium, while only 5% are in plans
that require no contribution at all for family coverage.


Seventy-eight percent of covered workers have a general annual
deductible for single coverage that must be met before most services are
reimbursed by the plan.

Among covered workers with a general annual deductible, the average
deductible amount for single coverage is $1,135.

Almost three-in-four covered workers pay a copayment (a fixed dollar
amount) for office visits with a primary care physician (74%) or a
specialist physician (72%), in addition to any general annual deductible
their plan may have.

Most workers also face additional cost sharing for a hospital admission
or an outpatient surgery episode. The average coinsurance rate for
hospital admissions is 18%, the average copayment is $278 per hospital
admission, the average per diem charge is $264, and the average separate
annual hospital deductible is $436.

Conclusion (excerpt)

The emergence of new exchanges, or marketplaces, also may portend
important changes for employer-sponsored health insurance. Through an
exchange, an employer can provide employees with a larger number and
type of health plan options. Exchanges also facilitate the use of
defined contributions or other strategies that encourage employees to
choose lower cost plans or pay the difference in costs themselves. New
SHOP exchanges will offer coverage options to small employers beginning
in 2014, although employee choice will be limited in the federal SHOP
exchanges until 2015. Large employers have the option of offering
coverage through one of several exchanges being sponsored by benefit
consulting organizations. While these approaches are new and differ
across different exchanges, the common theme is to devolve some benefit
choices, and some of the financial responsibility for those choices, to
employees. Whether this new way of purchasing coverage works for
employers and their employees, and how it affects benefits and plan
costs, will be among the more important stories for the employer health
insurance market over the next few years.

Comment: Many of the media reports about this annual Kaiser survey of
employer-sponsored plans are expressing relief that the increases in
premiums are relatively modest - only about 4 or 5 percent. But these
numbers are not so reassuring when you consider that they are over twice
the rate of wage increases and four time the rate of inflation. Workers
continue to fall behind.

Also of concern is the fact that plans requiring high deductibles have
increased and the amounts of those deductibles also have continued to
increase. Thus the percentage increase in the premiums can be quite
deceptive if you ignore the increase in out-of-pocket expenses that
workers and their families are experiencing.

Also many employers are now considering private insurance exchanges
which will allow them to convert their premium contributions into
defined contributions, requiring employees to pick up the additional
costs for plans that have more than minimal benefits.

Also there is considerable variation in the premiums, benefits, cost
sharing, and covered populations of employer-sponsored health coverage.
As if the average expenses that the employees must cover weren't bad
enough, many of them will find that the cost variations will be
intolerably burdensome, even if some are better off.

These trends have been going on so long that they've become quite
boring, but the cumulative impact on wage earners can be quite
distressing. Giving a new definition to "catastrophic insurance," the
costs shifted to the workers can be catastrophic. Instead of
catastrophic plans leaving people precariously exposed, what we really
need is prepaid coverage that removes financial barriers to health care
(i.e., single payer).

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