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Employers shifting health-care costs to workers, survey shows

The House of Representatives passed landmark legislation to overhaul the nation's health-care system, approving a Senate bill and a separate package of amendments.

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By David S. Hilzenrath
Thursday, September 2, 2010; 11:00 AM

Amid high unemployment and a weak economy, employers have been shifting health care costs to workers, according to a study released Thursday.

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The premiums that employees pay for employer-sponsored family coverage rose an average of 13.7 percent this year, while the amount that employers contribute fell by 0.9 percent, the survey found.

For family coverage, workers are paying an average of $3,997, up $482 from last year, while employers are paying an average of $9,773, down $87, according to the survey by the Kaiser Family Foundation and the Health Research & Educational Trust.

With so many people out of work, employees have little power to demand a better deal, the organizations said.

Overall, premiums for employer-sponsored coverage - the amounts paid by employer and employee combined - rose an average of 3 percent for family coverage and 5 percent for single coverage, the survey found. That was modest by historical standards. But the costs fell disproportionately on employees.

Workers with health benefits are paying an average of 30 percent of the premium for family coverage and 19 percent of the premium for single coverage this year, the highest in 12 years of surveys by the two organizations. Last year, workers were paying an average of 27 percent of the premium for family coverage and 17 percent for single coverage.

Premiums for single coverage rose an average of $225, and employees bore more than half of the increase.

"Many employers looked into their recession survival kit and seem to have concluded that one way to make it through the recession and hang on to as many employees as possible was to pass on their health premium increases to their employees this year," Kaiser Family Foundation President Drew Altman said by e-mail.

How much, if at all, the federal health-care overhaul enacted in March will restrain cost increases over the long run remains to be seen. While experts debate its likely impact, the legislation is "the only thing we have coming on line as a country to control costs other than what now seems like the primary default strategy in the private sector - shifting costs to people," Altman said.

Since 2005, employees' premium payments have gone up 47 percent while overall premiums have risen 27 percent. Over the same period, wages have increased 18 percent and the consumer price index, a measure of inflation, has risen 12 percent, the foundation and trust said in a news release.

Thirty percent of employers offering health benefits reported that this year, as a result of the economic downturn, they reduced the scope of benefits or increased cost-sharing - the amounts employees pay for medical services in co-payments, deductibles and the like.

Increasingly, employers are offering insurance plans with high deductibles. Twenty-seven percent of employees with health benefits now face annual deductibles of at least $1,000, up from 22 percent last year, the organizations said.

The Kaiser Family Foundation, which is not affiliated with the Kaiser Permanente health plan, conducts research on health issues. The Health Research & Educational Trust is an affiliate of the American Hospital Association.

The survey, which covered public and private employers with three or more workers, was conducted by phone from January through May.

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