Health-care premiums rise three times faster than wages

The cost of job-based family health insurance continues to tick upward in 2012, increasing faster than employee wages and overall inflation for the 13th straight year, according to a nationwide survey of businesses released Tuesday.

For the 149 million workers with employer-sponsored coverage, that typically meant higher co-pays, deductibles and other out-of-pocket medical costs, according to the 2012 Employer Health Benefits Survey by the Kaiser Family Foundation and the Health Research & Educational Trust.

The study found that low-wage workers are getting squeezed the hardest.

If there’s good news in the findings, it was that the rise in health care premiums slowed a bit.

After jumping 9 percent in 2011, average annual premiums for family coverage rose 4 percent in 2012, to $15,745. Individual premiums were up an average of 3 percent, to $5,615, after spiking to 8 percent in 2011, the survey said.

Still, even as the annual increases slowed in 2012, the growth of family and individual premiums outpaced the nearly 2 percent growth in employee wages and the more than 2 percent rise in general inflation since last year.

“In terms of employee insurance costs, this year’s 4 percent increase qualifies as a good year, but it still takes a growing bite of middle-class workers’ wages, which have been flat or falling in real terms,” said Drew Altman, Kaiser Family Foundation’s president and CEO.

Annual premiums for family coverage, after averaging slightly more than $8,000 in 2002, have increased nearly 100 percent in the last decade, while costs for individual coverage are up 82 percent. Both dwarf the 33 percent growth in wages and the 28 percent growth in general inflation during the same period.

It’s unclear what’s behind this year’s return to moderate growth in premium rates, but they could reflect a correction of sorts for last year’s higher-than-expected rate hikes, said Gary Claxton, a Kaiser vice president.

The steep increase last year likely reflected insurers’ expectation of higher benefit payments, as more Americans were expected to seek medical care during the economic recovery, Claxton said. That did not occur, however, and people continued to put off doctor visits and elective medical procedures last year.

But he said the health care law, which went into effect in 2010, did not have a meaningful effect on premiums this year and was not expected to next year, either, since its main provisions don’t kick in until 2014.

Two parts of the law have taken effect. One allows children up to age 26 to remain on their parents’ plans. The survey estimates that 2.9 million young adults — 600,000 more than last year — are insured through employer plans as a result. Another provision requires new plans to cover certain preventative medical services with no patient cost-sharing.

The survey said that both accounted for 1 percent to 2 percent of last year’s average premium increases.

The survey queried more than 2,000 businesses. This year, 61 percent offer employee health benefits, unchanged from a year ago but down from 68 percent in 2001.

Kaiser found that covered workers, on average, pay about $4,316, or nearly 30 percent, toward family coverage, while employers pay nearly 75 percent, or $11, 429.

For individual coverage, workers typically pay about 18 percent, or $951, with employers assuming the balance of $4,664.

The survey found that employees earning less than $24,000 a year pay about $1,000 more for family coverage than the 35 percent who earn at least $55,000. Low-wage workers are also more likely to pay higher deductibles.

But Mercer, a global human resource company that conducts a similar survey, said preliminary results show employers will pay an average of 6.5 percent more per employee for health coverage next year. An estimated 58 percent of employers are expected to shift those increases to employees in response, according to Mercer.

In addition, the company found that 16 percent of small companies, with 10 to 499 employees, and 6 percent of large companies, with 500 or more workers, plan to terminate their plans when the health care law is fully implemented.

The health care law requires insurers seeking rate increases of 10 percent or more on new policies to disclose the moves publicly and have them reviewed by state or federal officials to determine whether they’re unreasonable. That provision has helped consumers save about $1 billion in premiums, the federal government announced Tuesday.

Another rule, requiring that 80 percent of premium payments be spent on health benefits, has provided $1.1 billion in rebates to 13 million consumers; that’s an average rebate of $151 per household, the government said.