Health benefits continued to erode this year as employers tried to grapple with escalating expenses by cutting back coverage and shifting more of the cost burden to workers by raising premium contributions, deductibles and other out-of-pocket costs, according to the 2008 Kaiser Family Foundation/Health Research and Educational Trust survey.
Deductibles in preferred provider plans grew by an average of $99 to $560, but perhaps more significant was the surge in the prevalence of high-deductible health plans. This year, 18% of workers are enrolled in plans with deductibles of $1,000 or more, up from 12% in 2007 and 10% in 2006, according to the survey, released Tuesday.
High-deductible plans were more prevalent at small employers, defined as those with three to 199 employees. While just 9% of workers at large employers are enrolled in high-deductible health plans this year, 35% of those at small employers are, up from 8% and 21%, respectively, in 2007.
The share of employees enrolled in consumer-directed plans—high-deductible plans that include a tax-preferred savings option such as a health savings account or a health reimbursement arrangement—also increased to 8% in 2008 from 5% last year and 4% in 2006. The growth in CDHPs occurred mostly among small firms, where 13% of employees are now enrolled in this type of plan, compared with 8% in 2007. By contrast, just 5% of workers at large employers are enrolled in such plans, statistically unchanged from last year.
Premiums for both HDHPs and CDHPs are generally lower than for other types of health plans, though in addition to premiums, employers may also contribute to the savings accounts.
“What really jumps out at me from the survey this year is that we may be seeing the tip of the iceberg of a trend toward less comprehensive, skimpier insurance for many working people with higher deductibles and higher out-of-pocket costs,” said Drew Altman, president and chief executive officer of Washington-based KFF, during a press conference Tuesday morning in Washington, where the results of the annual survey were released.
“We’re seeing a change in the comprehensiveness of coverage, especially at small firms. We also found a noticeable growth in high-deductible health plans, especially for people who work for small employers,” Mr. Altman said. “It’s almost like we’re doing two different surveys, one for small employers and one for larger ones.”
All of these developments are driven by cost, he said.
Although the survey found the rate of increase averaged just 5% in 2008—down from 6.1% in 2007—collectively over the past 10 years, employers’ share of health benefit costs have grown by 119%, while employees’ share has increased 117%, Mr. Altman reported. As a result, the average annual cost of single coverage for all types of plans was $4,704 in 2008, compared with just $2,196 in 1999, while average family coverage premiums reached $12,680 in 2008, up from $5,791 10 years ago. Last year, single-coverage premiums averaged $4,479 and family coverage premiums averaged $12,106.
“The rate of increase in premiums this year is not an outsized one, like we’ve seen in the past, but the long-term picture in terms of premiums and costs to people is absolutely unchanged. So over the 10 years…premiums have risen three-and-a-half times faster than wages,” he said.
The survey also found that 40% of employers were either very likely or somewhat likely to increase the amount employees pay for health insurance next year, while 41% said they were either very likely or somewhat likely to raise deductibles; 45% said they were either very likely or somewhat likely to increase office visit copays or coinsurance; and 41% said they either were very likely to somewhat likely to increase the amount employees pay for prescription drugs.
“Less comprehensive, skimpier insurance is cheaper, as all employers have discovered, but it does shift more of the cost of care to working people which is a real burden at a time when they’re also at the same time being hit by rising energy prices with stagnant wages, declining 401(k) and for many people difficulty paying the rent and mortgage and their credit card debt as well,” Mr. Altman noted.
The 2008 KFF/HRET survey included responses from 1,927 randomly selected public and private employers located around the United States. It was conducted by telephone between January and May 2008.