Employees Are Increasingly On The Hook For Their Medical Costs

A Hospital Bill's High Fees Look Even Bigger When Unbundled : Shots - Health  News : NPRSource: Axios, by Caitlin Owens

The growth of high-deductible health plans led to people with employer-sponsored coverage paying for a larger share, on average, of their health care costs between 2013 and 2019, according to a new analysis by the Employee Benefit Research Institute.

Why it matters: A large portion are paying significantly more in terms of raw dollar amounts as well, with the biggest increases among the highest spenders — and that’s on top of premium increases. As costs rise, even many insured patients struggle to afford their care.

Yes, but: Out-of-pocket spending decreased during 2020, likely a byproduct of the way the pandemic disrupted the health care system and pandemic-era policies that may have lightened patients’ cost burden.

By the numbers: The share of their medical expenses paid by people enrolled in employer-sponsored coverage increased from 17.4 percent in 2013 to 19 percent in 2019, the analysis found. It declined to 16.2 percent in 2020.

  • * Enrollees spent a median $249 out-of-pocket in 2013, $287 in 2019 and $205 in 2020. This median includes people without any medical expenses. The average out-of-pocket costs rose from $737 in 2013 to $906 in 2019, falling to $811 in 2020.
  • * Enrollees in the 75th percentile saw their spending obligation increase from $826 in 2013 to $1,030 in 2019, and those in the 90th percentile saw an even larger increase, from $2,792 to $3,295.
  • * Out-of-pocket spending obligations varied significantly among patients with different underlying conditions.

Between the lines: Spending trends also varied based on the type of service.

  • * Before the pandemic, both the share of out-of-pocket spending and the absolute amount paid by patients increased most for outpatient services.
  • * The average amount spent out-of-pocket on prescription drugs actually decreased between 2013 and 2019, before seeing a slight increase in 2020.

Employer Sponsored Insurance Rate Remains Stable

Since 2009, employer-sponsored insurance has been on the decline in California. A key question around the Affordable Care Act (ACA) was whether the reforms would further erode employer-sponsored insurance coverage. A recent survey by the California HealthCare Foundation finds that employer-sponsored insurance in the state has remained stable from 2013 to 2015. Worker eligibility for employer-sponsored insurance also remained stable, and even increased among some groups. However, the percentage of eligible workers who chose to enroll in employer-sponsored insurance declined from 86.4% in 2013 to 80.2% in 2015, bringing California closer to the national average take-up rate of 79%. This decline could be caused by the availability of alternative coverage options through Medi-Cal and Covered California.

The Cadillac Tax Gets Delayed Until 2018

Congress passed a $1.5 trillion omnibus spending bill and $680 billion tax-extenders package, which funds the government through September 2016. President Obama signed the legislation on Friday. Included in the bill is a provision that will delay the Cadillac tax. The Affordable Care Act (ACA) imposes a 40% non-deductible excise tax on health plans with values exceeding $10,200 in coverage for singles and $27,500 for families beginning in 2018. The provision is indexed to inflation and will rise automatically over time, potentially affecting all employer-sponsored plans. If the tax goes into effect, employers could shift the cost of the tax to employees by raising deductibles and increasing other out-of-pocket costs. The omnibus bill delays the tax for two years, until 2020.

Sen. Sherrod Brown (D-OH) said, “A delay of the Cadillac tax is welcome relief for middle-class workers who shouldn’t be stuck with higher out-of-pocket costs or lower quality health care. Brown sponsored the American Worker Health Care Tax Relief Act of 2015, which would repeal the tax. The bill demands that repeal is accompanied by a proposal to offset lost tax revenue to prevent an increase in the federal deficit and protect the integrity of the health law. He added, “While I plan to continue working with my colleagues toward a full repeal of this tax, a two-year delay of the implementation date of this harmful tax will temporarily ensure that the cost of care isn’t shifted to workers in the short term.”

Terry O’Sullivan, general president of the Laborers’ International Union of North America (LIUNA) said, “LIUNA is just one of many labor, employer, health policy, and other groups opposed to this indefensible, misguided, and regressive 40% middle-class excise tax. Congressional action, while not the hoped-for outright repeal, is a big step in the right direction, and signals a recognition that the tax is deeply flawed. We hope that in the additional two years provided by this delay, Congress and the next President will, once and for all, repeal the deceptively named ‘Cadillac Tax.’”

Some employees want to choose their own health plan but many don’t know how

Forty percent of employees responding to a survey said they are content to let their employer choose their health insurance plan, but 41% said they would like to choose their own plan through the open market if their employer would pay the same amount as for employer-sponsored coverage. Many survey respondents also expressed reservations about their ability to choose the best health plan on their own. Employee Benefit News (3/11)

Premiums Rise 3% for Employer-Sponsored Family Coverage

Average annual premiums for employer-sponsored family health coverage reached $16,834 this year, up 3% from last year. This continues a recent trend of modest increases, according to a survey by the Kaiser Family Foundation/Health Research & Educational Trust (HRET). Workers are paying an average of $4,823 annually toward family coverage this year. The increase continues a recent trend of moderate premium growth. Premiums have increased 26% over the past five years compared to 34% in the previous five years and well below the annual double-digit increases recorded in the late 1990s and early 2000s. This year’s increase also is similar to the year-to-year rise in worker’s wages (2.3%) and general inflation (2%). Annual premiums for worker-only coverage are $6,025 this year. Workers have contributed an average $1,081 toward the cost of worker-only coverage this year. The survey also reveals the following:

  • 80% of covered workers have a general annual deductible, with the average reaching $1,217. For most services, workers typically pay this deductible before their health plan provides coverage. Since 2009, the average deductible has risen 47% from $826. “The deductibles for workers have crept higher over time, topping $1,200 on average this year. Today, four in 10 covered workers have at least a $1,000 deductible, nearly double the share from just five years ago,” said study lead author Gary Claxton, director of the Health Care Marketplace Project.
  • 41% of covered workers have an annual deductible of at least $1,000, including 18% with a deductible of at least $2,000. Sixty-one percent of covered workers at small firms (three to 199 employees) have deductibles of least $1,000; and 34% have deductibles of at least $2,000.
  • There has been little change in other forms of cost sharing, including co-payments for in-network physician visits (an average of $24 for primary care and $36 for specialists) and for prescription drugs ($11 for generics, $31 for preferred brands, $53 for non-preferred brands and $83 for specialty drugs).
  • 98% of large employers that offer health benefits also a wellness program. 73% of smaller employers that offer health benefits also a wellness program. 36% of large employers that offer wellness programs provide a financial incentive participation, such as a lower premium or deductible, a larger contribution to a tax-preferred savings account, a gift card, cash, or merchandise.
  • 18% of small employers that offer wellness programs provide a financial incentive for workers to participate, such as a lower premium or deductible, a larger contribution to a tax-preferred savings account, or a gift card, cash or merchandise.
  • 51% of large firms (at least 200 workers) that offer health benefits also offer biometric screenings. Just 1% require workers to complete the screening to enroll in the company’s health benefits, and 8% reward or penalize workers financially based on biometric outcomes.
  • 94% of employers with at least 100 workers offer health benefits to at least some workers.
  • 52% of employers with fewer than 50 workers offer health benefits. Since most employers are small, this group drives the offer rate for employers, which stands at 55% this year, similar to the 57% recorded last year.
  • Firms that do not offer health benefits most often cite cost-related reasons, though one in 10 say that the coverage available to workers through the ACA insurance exchanges as a factor.
  • 26% of covered workers are in grandfathered plans, down from 36% last year and 48% two years ago. This means that more workers will benefit from reforms, such as coverage of preventive benefits without cost sharing and an external appeals process.
  • Starting in January for non-grandfathered plans, the ACA set 90 days as the new limit for the waiting period before new hires become eligible for health benefits. Twenty-three percent of large firms and 10% of small firms reduced their waiting period during the past year. The average length of waiting periods for covered workers decreased from 2.3 months in 2013 to 2.1 months in 2014.
  • 23% of large firms that offer retiree health benefits are considering changes because of the ACA’s new public health insurance marketplaces.

The Foundation also released a graphic that charts the survey’s premium trends since 1999 for different types of firms. For more information, visit http://kff.org/EHBS.

Employer-Sponsored Family Health Premiums Rise 4%

Annual premiums for employer-sponsored family health coverage reached $16,351 this year, up 4% from last year, with workers paying an average of $4,565 toward the cost of coverage, according to a survey by the Kaiser Family Foundation/Health Research & Educational Trust (HRET). During the same period, wages were up 1.8% and general inflation was up 1.1%.

Kaiser president and CEO Drew Altman, Ph.D., said, “This year’s rise in premiums remains moderate by historical standards. Since 2003, premiums have increased 80%, nearly three times as fast as wages (31%) and inflation (27%). We are in a prolonged period of moderation in premiums, which should create some breathing room for the private sector to try to reduce costs without cutting back benefits for workers.”

The survey reveals that firms with many lower-wage workers (at least 35% earning $23,000 or less annually) require workers to pay an average of $1,363 more toward family premiums than workers at firms with fewer lower-wage workers ($5,818 versus $4,455 annually). The lower-wage firms offer less costly coverage too, creating a large disparity in the share of the premium that their workers pay (39% versus 29%).

This year, 78% of all covered workers face a general annual deductible, up from 72% in 2012. Workers usually pay this deductible before most services are covered by their health plan. The average deductible for worker-only coverage is $1,135, similar to the $1,097 average deductible in 2012.

Thirty-eight percent of covered workers have a deductible of at least $1,000 or more. At small firms, 58% of covered workers have deductibles of at least $1,000, including 31% who face deductibles of at least $2,000, which is up from 12% in 2008.

In 2013, 35% of employers say wellness plans are very effective for controlling costs compared to 22% who say that disease management programs are very effective, 20% who say that consumer-driven health plans are very effective and 17% who say that cost sharing is very effective.

Nearly all large employers (at least 200 workers) offer at least one wellness program, which can take many forms and target a wide range of conditions. Thirty-six percent of large employers who offer wellness programs offer a financial incentive for workers to participate, such as lower premiums or a lower deductible, a larger employer contribution to a tax-preferred savings account, gift cards, and cash or other direct financial incentives.

Fifty-five percent of large firms that offer health benefits offer biometric screenings. And 11% of them reward or penalize workers financially based on whether they achieve biometric outcomes.

The Affordable Care Act (ACA) includes provisions that allow broader use of financial incentives to encourage workers to improve their health. Gary Claxton, director of the Foundation’s Health Care Marketplace Project said, “This will be an important issue to watch next year, as employers will have more flexibility and could ask workers to pay more because of their lifestyles and health conditions.”

Thirty-six percent of covered workers are in grandfathered plans, down from 48% last year. The shift means that more will benefit from reforms, such as coverage of preventive benefits without cost sharing and an external appeals process. The slow growth in premiums also means that fewer employer plans will be subject to the ACA’s high-cost plan tax that takes effect in 2018. The Congressional Budget Office recently reduced its estimate of the number of plans that would trigger the tax, and a continued low growth rate could further reduce the affect of this provision.

Twenty-nine percent of employers with at least 5,000 workers are considering a private exchange. These larger firms employ almost 40% of all covered workers, so their interest could indicate a significant shift in the way many people get their health insurance.

This year, 57% of firms offer health benefits to their workers, which is statistically unchanged from the 61% in 2012 and 60% in 2011. As in the past, the larger an employer is, the more likely it is to offer health benefits. Nearly all firms with at least 200 workers offer health benefits to at least some of their workers. Twenty-three percent of firms with many low-wage workers offer health insurance compared to 60% of firms with few low-wage workers.

Since most firms in the country are small, variation in the offer rate is due primarily to changes in the percentages of the smallest firms (three to nine workers) offering health benefits (45% in 2013, similar to the 50% which did so in 2012).  For more information, visit http://kff.org/EHBS.

Last Updated 08/10/2022

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