Study shows increase in worker health insurance contributions outpaces total premium growth

Workers bear larger share of health premium costs

INDIANAPOLIS — Workers are paying a larger portion of their health insurance costs as businesses shift more of the burden to their employees to help ride out the economic downturn, an annual study shows.

The average employee contribution toward premiums for family coverage climbed 14 percent this year to nearly $4,000, according to a report by the Kaiser Family Foundation and the Health Research and Educational Trust released Thursday. Contributions for single coverage grew 15 percent. But total premiums — the amount split by the employer and employee — rose a modest 3 percent for family coverage and 5 percent for single employees this year.

Companies that offer benefits still pay at least 70 percent of the total premium, on average, for their workers. But this year, companies passed most of the premium increases on to employees instead of absorbing them as they usually do, something researchers had not seen before, Kaiser CEO Drew Altman said.

“It just speaks to the depths of the recession and the pressure that employers have been under to hold the line on costs while, I think, trying as best they can to avoid layoffs,” he said.

Instead of simply working rising coverage costs into their budgets, companies are finding new ways to push more of the financial burden on employees and trying to make them think more about what they’re spending for care, said Paul Fronstin, director of the health research program for the nonprofit Employee Benefit Research Institute.

“There’s lots of trade-offs employers can make to maintain health benefits when costs are going up,” said Fronstin, who wasn’t involved in the Kaiser study.

For instance, a growing number of workers are covered by health insurance that requires them to pay a deductible of $1,000 or more before most coverage starts. The Kaiser study found the most striking increase among small companies, where 46 percent of workers are enrolled in these high-deductible plans, up from 16 percent in 2006.

Some companies also are trying to steer employees toward preventive care, in an effort to cut long-term costs. They’re reducing or eliminating the price workers pay for things like primary care visits, diabetes treatments or blood pressure testing that can ward off more expensive care down the road.

“The coverage that employees get is looking less and less like the coverage that their parents used to get,” Altman said.

Altman said premium growth may have slowed for this year’s benefits, which would have been calculated in 2009, because of the recession and the possibility of health care reform. He said they’ve seen restrained premium hikes from insurers in the past when Congress has debated reform.

But it didn’t slow for everyone. At the National World War I Museum in Kansas City, Mo., premiums for the 26 covered employees rose 18 percent last year and about 12 percent for the current benefits year, said Chief Financial Officer Jeff Walker.

He said museum supervisors were trying focus more on educating staff about the best use of health care, and they’re considering offering gym memberships as part of a wellness program.

“I think we all know the cost for these insurance plans is going to continue to increase,” he said. “This can’t be a long-term solution for us.”

The nonprofit Kaiser and the research trust surveyed more than 3,000 randomly selected companies from across the country earlier this year for its annual report.

(This version CORRECTS spelling of EBRI official’s name to Fronstin)