Family Health Premiums Rose By 4 Percent In 2013: Kaiser/HRET

Annual premiums for employer-sponsored family health coverage rose 4 percent in 2013, to $16,351, according to recent research from the Kaiser Family Foundation and the Health Research and Educational Trust (HRET). The 2013 Employer Health Benefits Survey found workers paid, on average, $4,565 toward the cost of family coverage. The cost of single coverage rose 5 percent, to $5,884 in 2013. Over this same time period, workers’ wages and general inflation were up 1.8 percent and 1.1 percent, respectively.

Kaiser/HRET noted that this year’s rise in premiums remains moderate by historical standards. Since 2003, premiums have increased 80 percent, nearly three times as fast as wages (31 percent) and inflation (27 percent).

“We are in a prolonged period of moderation in premiums, which should create some breathing room for the private sector to try to reduce costs without cutting back benefits for workers,” said Drew Altman, Kaiser president and CEO.

The survey also found the following:

Offer rates. Fifty-seven percent of employers offer health benefits to employees, statistically unchanged from 61 percent in 2012. Large employers are more likely to offer health insurance, with nearly all of employers with more than 200 employees providing coverage. The percentage of the smallest firms (those with three to nine workers) dropped from 50 percent in 2012 to 45 percent in 2013, the survey noted.

Increasing deductibles. In 2013, 78 percent of all covered workers faced a general annual deductible, up from 72 percent in 2012. The average deductible was $1,135, Kaiser/HRET found.

Wellness plans. In 2013, 35 percent of employers said that wellness plans are a very effective strategy for controlling costs, a larger share than said the same about any other strategy, including disease management (22 percent), consumer-driven health plans (20 percent) or higher cost sharing (17 percent). Nearly all large firms offer at least one wellness program. In addition, 36 percent of large employers offered a financial incentive for workers to participate in a wellness program.

Retiree coverage. Twenty-eight percent of large firms that offered health benefits in 2013 also offered retiree health benefits. Of these, 90 percent offered retiree benefits to early retirees, 67 percent offered benefits to Medicare-age retirees, and 4 percent offered a plan that exclusively covered prescription drugs.

Health Reform

Kaiser/HRET also asked employers about certain aspects of the Patient Protection and Affordable Care Act (ACA). “This will be an important issue to watch next year,” said Gary Claxton, Kaiser vice president.

The survey found that 36 percent of covered workers are in “grandfathered” plans as defined by the ACA, down from 48 percent last year. The shift means a rising share of workers will benefit from some of the ACA’s reforms affecting the employer market, such as covering preventive benefits without cost sharing and offering an external appeals process.

The slow growth in premiums also means that fewer employer plans are likely to be subject to the ACA’s high-cost plan tax that takes effect in 2018. The Congressional Budget Office recently reduced its estimate of the number of plans that would trigger the tax, and a continued low growth rate could further reduce the impact of this provision.

For the first time, Kaiser/HRET also asked large employers about their interest in private health insurance exchanges, a relatively new concept that pulls together a wide range of insurance plans which participating employers can offer to their workers to choose from. Though relatively few chose this option in 2013, 29 percent of those with at least 5,000 workers said that they are considering offering benefits through a private exchange in the future. These jumbo firms employ almost 40 percent of all covered workers, so their interest could portend a significant shift in the way many people get their health insurance in the future.

The survey contains responses from 2,948 employers. For more information, visit http://kff.org/private-insurance/report/2013-employer-health-benefits/.

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