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From Health Law Daily, August 21, 2013

Price of health premiums slows for second straight year

By Jenny M. Burke, JD, MS

Employer-sponsored family health care annual premiums increased 4 percent in 2013, according to the Kaiser Family Foundation/Health Research & Educational Trust (HRET) 2013 Employer Health Benefits Survey. With workers paying an average of $4,565 toward the cost of their coverage, the total annual premiums for family health coverage reached $16,351 this year. During the same time period, workers’ wages and general inflation rose at a slower rate, 1.8 percent and 1.1 percent respectively.

Premiums. The Kaiser/HRET survey found significant variation around the average single and family premiums this year, which it attributes to differences in benefits, cost sharing, covered populations, and geographical location. According to the report, 21 percent of covered workers are in plans with an annual total premium for family coverage of at least $19,622 (120 percent of the average family premium), while 21 percent of covered workers are in plans where the family premium is less than $13,081 (80 percent of the average family premium). The distribution is similar around the average single premium.

On average, workers with family plans typically pay about 28 percent of the premium costs, with their employers picking up the rest, according to the Kaiser data. Individuals pay a smaller share, 17 percent for single coverage. Their premiums rose 5 percent for individual coverage to $5,884. Still, workers pay only a fraction of the overall cost, and the increase in that cost is slowing down.

Slow growth. This year, the rise in costs is below last year’s 4.5 percent jump and less than half the 9.5 percent gain seen in 2011. In fact, the 2013 premium increase was the second lowest since Kaiser/HRET began conducting the survey in 1999. At that time, increases of more than 9 percent a year were common. Over the last 10 years, the average premium for family coverage has increased 80 percent, which is almost three times as fast as wages (31 percent) and inflation (27 percent).

Plan enrollment. The most common plan type, the study found, is a preferred provider organization (PPO) plan, in which 57 percent of covered workers in 2013 are enrolled. Twenty percent of covered workers are enrolled in a high deductible health plan (HDHP), 14 percent in an HMO, 9 percent in a point of service (POS) plan, and less than one percent in a conventional plan. HDHP enrollment increased significantly between 2009 and 2011, from 8 percent to 17 percent of covered workers, but, the report noted, enrollment seems to have plateaued since then. The distribution in health plan enrollment varies by firm size, as PPOs are more popular among workers at large firms (200 or more workers) versus those at smaller firms, and POS plans are more prevalent in smaller firms.

Benefits and wellness programs. The survey of more than 2,000 employers found 57 percent offering health benefits, a number that’s basically unchanged from last year’s 61 percent. What is changing, however, is that more than a third of employers with more than 200 workers are now tying at least part of an employee’s share of the bill to their participation in a wellness program. These types of programs are becoming a popular strategy for employers trying to control costs.

According to the survey, in 2013, 35 percent of employers reveal that employee wellness programs are a very effective strategy for controlling costs. This strategy is proving to be the best method, as other strategies don’t even come close. Disease management (22 percent), consumer-driven health plans (20 percent) or higher cost sharing (17 percent) provide savings, but just can’t match employee wellness programs.

Employers are taking notice. The report revealed that nearly all large employers (with at least 200 workers) offer at least one type of wellness program. These programs can take many forms and may target a variety of conditions. More than a third of large employers who offer wellness programs offer some kind of financial incentive for workers to participate, such as lower premiums or a lower deductible, receiving a larger contribution to a tax-preferred savings account, or gift cards, cash or other direct financial incentives.

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