The latest Kaiser/HRET survey states that for the first time in five years, employer health costs have not increased in double digits. It is good news, to a point. The 9.2 percent growth rate was more than three times the average growth rate of worker wages as well as inflation.
Workers also paid more for their health benefits. On average, the amount paid for family coverage increased from $149 in 2001 to $226 in 2005 -- an increase of almost 52 percent. The current cost dip is not considered a strong indication of future slowdowns in health coverage costs.
With an average family health policy costs in the $11,000-$12,000 range, health costs “are intolerable, and what’s going to happen is that employers’ only choice will be to eliminate coverage or increase what the employee pays,” said Larry Helminiak speaking with the Baltimore Sun. When Helminiak founded his Maryland company he used to pay the full cost of workers’ health coverage. Helminiak said 20 years ago, the monthly cost was $68. Now it is $768 and workers must pay 25 percent of the cost or $192 monthly. The company currently has over 50 workers.
“It is low-wage workers who are being hurt the most by the steady drip, drip, drip of coverage draining out of the employer based health insurance system,” said Drew E. Altman, Ph.D. and Kaiser Family Foundation President and CEO.
There was a reduction in the number of employers offering health coverage too. In 2000, 69 percent employers offered health benefits, 63 percent did last year, and now 60 percent of employers do. Two thousand employers participated in this random survey.
Larger employers have greater control over costs than smaller firms because they can adjust benefits or add disease management programs that allow workers to deal with their asthma or other chronic illnesses themselves. Wellness programs to help workers stop smoking or fight obesity are helping shift costs down. Unfortunately, many small firms do not offer the same range of health coverage and so cannot benefit from the cost mitigation they provide.
“Consumer-driven plans are proving attractive to some, but with just a couple million people now enrolled, it’s too early to know whether they’ll have a meaningful effect on the health system. The jury is still out on whether employees feel that these arrangements work for them, particularly when they get sick, and on whether employers feel that they have a real impact on costs,” said Gary Claxton, a Kaiser Family Foundation vice president who co-authored the current survey.
Shifting costs onto workers via higher co-payments and deductibles is a growing trend. The $10 office visit co-pay has largely been replaced by $15 office visit co-pay fees. Another trend to reducing costs is streamlining medical records by using computer technology. Employers are also considering charging smokers more for their coverage than nonsmokers.
Helen Darling, head of the National Business Group on Health based in Washington said to USAToday, “We have to understand this unaffordable and affecting everyone. We have to work together.”