Benefits

Small Employer Health Plans Push Costs Onto Workers


Small Employer Health Plans Push Costs Onto Workers

Photograph by Ingram Publishing/Getty Images

Small businesses aren’t dropping health benefits en masse in response to rising costs and the looming Obamacare reforms. They’re just making workers pay more for it.

That’s the picture that emerges from the new Employer Health Benefits Survey from the Kaiser Family Foundation, a detailed survey of more than 2,000 U.S. employers of all sizes. The report showed a moderate 4 percent increase in health premiums this year, and the share of companies offering benefits, at 57 percent, was about the same as last year.

Most workers with health benefits now have a “general deductible,” a portion of medical costs they have to pay directly before the insurance plan kicks in. At small firms (in this case, companies with between 3 and 199 workers), the average deductible for an individual plan is $1,715 in 2013, according to Kaiser. That’s almost double the average amount that workers in larger firms are on the hook for.

And for the first time in Kaiser’s survey, a majority of workers covered by small employers—58 percent—have deductibles of at least $1,000. That’s a significant jump from 49 percent last year, and 21 percent in 2007.

“The trend continues, especially in smaller firms,” Drew Altman, chief executive of the Kaiser Family Foundation, told reporters on a conference call. “It’s part of what I see as a quiet revolution in health insurance from more comprehensive to less comprehensive with higher deductibles.”

And while Republicans protest the Affordable Care Act reforms, Altman says the growth of these health plans represents a victory for conservative health policy. “Beneath the radar screen, the vision of insurance that they’ve always favored, with much more skin in the game, is the one that’s coming to dominate in the marketplace,” Altman says.

It’s worth noting that high average deductibles don’t represent what the typical health-care consumer pays. That’s because many healthy people will use little or no medical care, while a few sick ones will need much more. “Most consumers don’t pay the average amount out of pocket because most health care is used by the few people who are very sick,” Kaiser’s Gary Claxton pointed out on the call.

Kaiser’s data, collected in partnership with the Health Research & Educational Trust, also provide some useful facts to keep on hand in the blitz of competing claims about Obamacare:

• Overall, employer health premiums for family plans rose 4 percent this year. While that’s faster than wages and general inflation, it’s much slower than the typical premium increases in previous years. “For me, a 4 percent premium increase is pretty striking. It’s also pretty good news,” Altman said.

• That doesn’t mean Americans feel good about it. Premiums have grown faster than workers’ paychecks every year since Kaiser’s survey began in 1999. And people are paying more through higher deductibles and other cost-sharing mechanisms. So it’s no surprise that when Kaiser polls consumers, a majority say their premiums are going up faster than usual, even though the survey of what insurers actually charge for premiums shows the opposite is true. “People still feel the pain of health-care costs and worry about paying their health-care bills,” Altman said.

• Most companies subject to Obamacare’s mandate already provide health coverage. Though the White House delayed for a year the part of the law that requires employers with 50 or more workers to provide affordable coverage or pay a fine, 93 percent of them already offer some health benefits, according to Kaiser. However, the plans they offer today may not meet the law’s standard for affordable coverage.

John_tozzi
Tozzi is a reporter for Bloomberg Businessweek in New York.

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