Surveys: Health insurance costs shifted to workers, even as premiums surge

Premiums for employer-sponsored health insurance continued to escalate this year even as the share of workers getting less generous coverage reached a new high, according to survey data released Tuesday.

In 2011, for the first time, half of workers at small firms with individual policies faced annual deductibles of $1,000 or more. In 2006, that figure was 16 percent. At large firms, the share has grown from 6 percent to 22 percent over the same five years.

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"This is exactly the opposite of what health insurance is supposed to be all about. Insurance is supposed to prevent you from suffering financial consequences from being unlucky enough to get an illness or have an accident. By making those who have health care needs pay more, the whole concept of insurance is belied. It is incredible that one of these corporate machine people can say something like this with a straight face."

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At the same time, the survey by the Kaiser Family Foundation found that premiums for family plans rose 9 percent in 2011, after several years of slower annual growth. A similar recent survey by the consulting firm Mercer found that yearly premium increases have been hovering around the 6 percent mark and will grow by slightly less in 2012.

Both sources point to the same fundamental long-term shift: Faced with continually climbing premiums, a record share of employers have moved to plans that require workers to pay more out of pocket.

“Without any real national discussion or debate, there’s a quiet revolution going on in what we call health insurance in this country,” said Drew Altman, president of the Kaiser foundation, which conducted the annual survey of employers in conjunction with the Health Research & Educational Trust. “Health insurance is becoming less and less comprehensive. . . . And we expect that trend to continue.”

Employers seem to be turning to cost-shifting as an alternative to dropping coverage outright. During the first half of the decade, the share of companies offering health insurance shrank from 68 percent to 60 percent, and the figure for very small firms dropped from 58 percent to 48 percent. But since about 2005 that decline has leveled off.

Premiums paid directly by workers have galloped ahead of wage increases and inflation — rising 131 percent between 2001 and 2011 for family plans. Employer costs for those plans have gone up 113 percent over the same period, as some have asked their workers to take on a higher proportion of premium costs.

Still, employers are primarily coping with rising health-care expenses by moving their workers into plans with higher out-of-pocket costs such as deductibles, co-pays and co-insurance.

It’s a process human resources director Teresa Wilmot describes as “agonizing every time you have to do it.”

In 1989, when Wilmot joined Dehen Jackets, a Portland, Ore., manufacturer of cheerleader uniforms and letterman jackets, the company offered its 80 employees complete health insurance coverage. For a monthly payment of about $40 from the worker and $130 from Dehen, the plan covered all expenses except a $10 co-pay for doctor visits.

But every year beginning in the late 1990s, Wilmot said, her insurance broker would present her with a higher premium to keep the same plan. By 2003 it became necessary to shift to a lower-priced version requiring workers to pay a percentage of their health costs up to $1,200. In 2004 Wilmot had to add a $250 deductible. Even so the plan’s monthly premium topped $300.