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Workers Paying More for Health Insurance as Cash-Strapped Companies Shift Costs

The majority of Americans get their health insurance coverage through their employers. Now, a new survey finds that employees are paying more of the costs of their coverage than ever before. Workers’ health care costs jumped significantly this year even as overall premium prices rose only slightly, as recession-strapped companies shifted more of the health care cost burden to their employees.

The cost of the average family health plan rose a relatively slight 3 percent in 2010, to $13,770. But the share covered by employees jumped 14 percent, to $3,997 — an increase of $482 since 2009 — according to an annual survey released Thursday by the Kaiser Family Foundation.

“It’s the first time I can remember seeing employers deal with a rise in costs by shifting those costs entirely to employees,” foundation President Drew Altman told reporters. “It shows the depths of the recession,” he added.

Employees are also paying higher deductibles. Twenty-seven percent of employees are enrolled in plans with deductibles of $1000 or more, as compared with 22 percent of employees last year and only 10 percent of employees five years ago. (Some of that increase is attributable to the increasing popularity of high-deductible health plans with savings options, such as health savings accounts. Thirteen percent of employees are covered by such plans now, compared to 8 percent in 2009.)

Most workers are not getting more for their money. Thirty percent of firms this year said that they reduced the scope of their health benefits or increased cost-sharing because of the economic downturn.

The increase in worker cost-sharing follows a long trend seen in the 12-year-old survey. Over the past decade, the total cost of average health insurance premiums for a family plan have risen 114 percent, from $6,438 to $13,770. But the share contributed by workers has jumped even more, from $1,619 to $3,997 — a 147 percent increase.

“What workers pay for health insurance continues to go up much faster than their wages,” Altman said. “You have to look over time to really see it, but from the perspective of working people, they’re just getting less for more.”

The researchers attributed this year’s relatively moderate overall rise in premium costs to the recession, as companies did what they could to minimize cost increases by reducing benefits or taking other measures.

“We’re in tough economic times, and employers structured their benefit packages and did what they could to not pay big premium increases,” said Gary Claxton, director of the foundation’s Health Care Marketplace Project. Altman said that he expected the rise in premiums to pick up again as the economy recovered.

The researchers said that it was difficult to say what effect the new health reform law might have on future cost increases — it’s a controversial subject that divides experts.

“Obviously there are different views on the health reform legislation,” Altman said. “But its many cost-containment provisions are really the only thing we have coming down the line with the prospect to have a long-term impact on cost, other than what at the moment seems to be the default strategy in the private sector, which is increased cost-sharing. We don’t know how successful they’ll be, but we better hope they’ll be successful.”

The survey also delved into other aspects of the health insurance landscape, among its many findings:

  • This year’s Mental Health Parity Act, which requires companies with 50 or more employees to offer mental health coverage comparable to physical health coverage, prompted 31 percent of those companies to change their mental health benefits. Most (66 percent) of those eliminated limits on mental health coverage, but a small number (5 percent) dropped mental health coverage all together.

  • The number of employers offering wellness benefits like gym discounts, exercise programs and health information Web sites increased from 58 percent last year to 74 percent this year. Most of that jump was from an increase in the number of companies that offer Web-based health resources.

  • Relatively few companies reviewed quality or performance data when choosing a health insurer. Only 34 percent of large firms and five percent of small firms looked at that data, and only 49 percent of those reported that it was “somewhat influential” or “very influential” in their decision.