Premiums on the Rise

by Phil Davidson, Marathon Health

November 18, 2011

The Health Research & Educational Trust (HRET) recently released the results of a study on health insurance premiums in the wake of the 2010 Affordable Care Act.

The results are very interesting. Here’s an excerpt:

After several years of relatively modest premium increases, annual premiums for employer-sponsored family health coverage increased to $15,073 this year, up 9 percent from last year, according to the Kaiser Family Foundation/Health Research & Educational Trust 2011 Employer Health Benefits Survey released today.  On average, workers pay $4,129 and employers pay $10,944 toward those annual premiums.

Premiums increased significantly faster than workers’ wages (2.1 percent) and general inflation (3.2 percent).  Since 2001, family premiums have increased 113 percent, compared with 34 percent for workers’ wages and 27 percent for inflation.

There’s more:

The study also finds 31 percent of covered workers are in high-deductible health plans, facing deductibles for single coverage of at least $1,000, including 12 percent facing deductibles of at least $2,000.  Covered workers in smaller firms (3-199 workers) are more likely to face such high deductibles, with half of workers in smaller firms facing deductibles of at least $1,000, including 28 percent facing deductibles of $2,000 or more.

We found this statistic to be especially confounding. Almost one-third of employees are in high-deductible health plans with low premiums, and yet, employer-sponsored premiums are still up 9 percent as a whole for family health coverage. Marathon Health works with several employers who offer high-deductible health plans. The benefit of offering onsite healthcare with a high-deductible plan is that employees have an affordable option for care they might otherwise avoid. Additionally, staff members at the onsite health clinics are available to help employees make the best use of their healthcare dollars and resources. Our clinicians serve as patient advocates and help employees find the highest-quality, lowest-cost care through the HealthCare Blue Book and other resources.  Many of our clients tell us that offering an onsite health clinic mitigated the impact when they transitioned to the high-deductible model. As more companies turn to high-deductible plans, we suspect insurance premiums may stabilize, but in the meantime, what accounts for the continued sharp increases?

Many signs point to some of the provisions in the 2010 healthcare overhaul law.

Under the 2010 health-care overhaul law, employers must allow the adult children of their employees to stay on their parents’ plan until they reach age 26 unless those children can get coverage through their own jobs. Insuring these generally healthy young people adds about 3 percent to the cost of a plan, according to insurance consultants.

According to the U.S. Department of Health and Human Services, each new dependent will tack on an additional $3,380 to their parents’ insurance costs this year. By 2013, extra dependents will add $3,690 to families’ annual insurance bills.

To read more about the study, click here.

We’d love to hear your thoughts. What do you think? Have your insurance premiums increased significantly this year?