Employees Paying More, Getting Less From Employer-Based Plans

Premiums for family coverage in private employer-based health insurance plans increased 73 percent between 2003 and 2013, rising faster than the median family income, according to recent research from the Commonwealth Fund. Employees’ contributions to their premiums also rose, jumping 93 percent over the past decade. The report notes that workers are paying more for coverage but getting fewer benefits. However, premium growth slowed between 2010 and 2013 after the implementation of the Patient Protection and Affordable Care Act (ACA).

Premium growth affected by ACA. The Commonwealth Fund found that the average annual premium for employer-sponsored family coverage reached approximately $16,000 in 2013, up from approximately $9,000 in 2003. Premiums for single coverage also rose, climbing from about $3,500 in 2003 to nearly $6,000 in 2013. The report focused on the difference in premiums before and after the ACA’s implementation, noting that the growth rate of premiums slowed to an annual rate of 4.1 percent per year after implementation compared with 5.1 percent in the seven years of data before the ACA. The reduction in the premium growth rate was more pronounced in large employer plans than in small employer plans because of the tendency of large employer plan premiums to grow at a faster rate than small employer plans pre-ACA. After the ACA was enacted, the rate of premium growth was about the same for both small and large employers.

Premiums increase faster than incomes. The report states that insurance premiums have risen faster than median incomes for individuals under 65. Average premiums have climbed by 73 percent since 2003, but incomes have only risen by 16 percent in the same period. In 2013, the average family premium was 23 percent of the median family income, compared to 15 percent in 2003. For single coverage, premiums have risen 60 percent since 2003, but income has only risen 11 percent.

To offset the rising costs of health care, employers also have increased the contribution amount (such as deductibles and copayments) paid by employees, increasing from 17 percent to 21 percent. Deductibles have more than doubled from 2003 to 2013. When combined with higher premiums, the report notes, employees are paying more for less financial protection.

For more information, visit http://www.commonwealthfund.org/publications/issue-briefs/2014/dec/national-trends-employer-coverage.

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