Health Care Out of Pocket is Rising for Workers
Workers pick up greater share of health care costs, survey finds
By Lorraine Mirabella The Baltimore Sun contact the reporter
Workers can expect to take on more of the burden of health care costs.
Enrollment jumped last year in high deductible health plans offered by employers.
Health care costs might be rising less sharply than they were a few years ago, but employers continue to make employees take on more of the burden, and that’s likely to continue, a new survey shows.
Plans with high deductibles are becoming the norm, and employers are contributing less to the employee health savings accounts tied to those plans, according to an annual survey released last week by benefits advisory organization United Benefit Advisors.
“More and more of this is on the back of the employee,” said Jonathan Weiner, professor of health policy and management at the Johns Hopkins Bloomberg School of Public Health. “They’re paying more up front and more after the fact,” and, he said, seeing steeper increases in their share than employers.
Employers are shifting more responsibility and cost to workers through increases in out-of-pocket costs and cutbacks in family benefits, according to the survey of nearly 10,000 small to large employers, billed as the largest benchmarking survey of its kind. Employers use the results to design plans and cost sharing in a way that will keep them competitive while allowing them to attract workers.
Among other findings, the survey found employer wellness programs have declined slightly and small businesses could be facing sharper cost increases as federal health care reform takes hold.
More than half the employers surveyed by United Benefit Advisors offer one health plan option, and just over a quarter offer two.
Plans last year cost an average of $9,504 per worker, with the employer contributing $6,276 and the employee contributing $3,228, up from $3,184 in 2013, the survey said. Premium rate increases averaged 5.6 percent, ranging from a low of 4.5 percent for “exclusive provider organizations” or EPOs, to a high of 6.3 percent for traditional, point-of-service plans.
Nationwide, deductibles for in-network services last year averaged $1,901 for a single person and $4,256 for a family, roughly the same as the year before, the survey found. Yet out-of-pocket maximums jumped 6 percent to an average $3,900 for a single employee and 3.5 percent to $8,000 for a family.
Costs in Maryland remained below the national average, according to UBA. In-network deductibles averaged $1,511 for a single person and $3,044 for a family, while out-of-pocket maximums averaged $3,178 for a single person and $6,469 for a family.
“The biggest thing in this community right now is high-deductible health plans,” said Lawrence W. Ulvila Jr., a founding partner with Annapolis-based Insurance Solutions, an employee benefits design consulting firm. “They’re growing across the country, but they have been really strong in Maryland.”
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Under the plans, a spending threshold must be reached before the insurance starts paying for health care. The plans typically offer low premiums and tax-free health savings accounts, often with contributions from employers, where employees can set aside money that can be used for deductibles and other approved expenses.
Enrollment in these so-called consumer-driven health plans grew more than 30 percent from 2012 through 2014. They accounted for nearly a quarter of all plans last year, second only to PPO’s, or preferred provider organizations, which still dominate the market at nearly 50 percent, the survey found.
“We’re seeing the employer not walk away from [its] historical obligation, but phasing into a different relationship with the worker when it comes to health benefits,” said Robert Laszewski, president of Washington-based health care firm Health Policy and Strategy Associates LLC, which advises insurance companies. “This is a way for employers to save money.”
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Ulvila, who said many of his employer clients now offer only high-deductible plans — whether health maintenance organizations (HMOs) or PPOs — believes the model can be an efficient way to lower costs for employers and employees.
Such plans, however, have pros and cons, Weiner said.
“It’s good people think twice about getting an MRI they don’t need, but it’s not good if they don’t call a doctor if they have symptoms that could be life-threatening or don’t take medication,” Weiner said.
Jon R. Gabel, a Bethesda-based senior fellow at NORC, a social research center at the University of Chicago, said the consumer-driven model has grown as more and more people have become comfortable with high-deductible plans.
“A lot of the benefit managers and brokers will say it’s a philosophy of accountability and responsibility and employees are empowered, but what really drives it is the premiums cost less for these plans in general,” Gabel said.
Though wellness programs are seen as complementing the growing trend of shifting more responsibility to employees, some employers put their programs on hold because of pending litigation and regulatory changes, UBA said. The share of employers offering wellness programs declined on average by 1.3 percent, though such programs are far more prevalent among large employers.
The decline may reflect employers, especially smaller ones, focusing more on health care reform than on developing wellness programs, according to UBA’s report.
Still, the survey considers wellness programs a viable option to save money, through health risk assessments, biometric screenings, coaching for high-risk employees and seminars or workshops. And few experts believe wellness programs are going away any time soon.
Gabel said he finds the reported decrease in wellness programs surprising.
“It goes with high deductibles and the whole idea of the employee being more responsible,” Gabel said. “The large employers are much more committed than small employers,” who he said may have been over-represented in the survey.
The survey also found that small businesses likely will face sharply higher cost increases in the future.
Many employers renewed existing plans early, by Dec. 1, 2013, to delay having to comply with Affordable Care Act requirements for benefits cover care until this past December, the survey found. But those that delayed eventually could be hit with rate increases of 30 percent to 160 percent, the survey found.
Even as employer-sponsored plans have shifted more costs to workers, deductibles remain lower than those for plans through public health exchanges, said. He noted that the average in-network deductible of $1,901 cited by the survey fell below the average Silver plan deductible of $2,027 and average Bronze plan deductible of $5,081, according to a HealthPocket survey.
“Obamacare has set a new standard for health insurance,” Laszewski said. “It used to be the president and the guy sweeping the floor had exactly the same health plan.”
He likened the shifts in health insurance to those in retirement plans for workers, where employees pay for and manage 401(k)s instead of counting on a pension from their employer.
“Obamacare has given the employer political coverage,” he said, “to increase deductibles and shift costs.”