Employer Health Premiums Slow for Second Straight Year

Health-insurance premiums to cover working Americans rose 4 percent this year, less than the previous two years in another sign that the cost of employee benefits for U.S. companies may be slowing.

Annual premiums for a person who opts for a family coverage plan through their job increased this year to $16,351, the Kaiser Family Foundation said today in its annual survey of benefits costs. The rise was below last year’s 4.5 percent jump and less than half the 9.5 percent gain seen in 2011, the Menlo Park, California-based research group said in a statement.

The reported slowdown is similar to results from other studies of U.S. health spending. Economists have attributed the trend to a weak U.S. jobs market, insurance plans shifting more costs to workers and President Barack Obama’s Affordable Care Act. Even so, premiums have risen almost three times as fast as wages or inflation over the past decade, Kaiser said.

“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,” Drew Altman, the foundation’s president, said in the statement.

Polls suggest workers aren’t feeling much relief, Altman told reporters today during a conference call. Kaiser’s survey found more than a third of employees face at least a $1,000 deductible as part of their health plans. Among small businesses, 31 percent of workers pay a $2,000 deductible compared with 12 percent five years ago.

’Quiet Revolution’

The trend is “part of a quiet revolution in health insurance from more comprehensive to less comprehensive,” Altman said. “People still feel the pain of health-care costs and worry about paying their health-care bills.”

The survey of more than 2,000 employers found 57 percent offering health benefits, statistically unchanged from last year’s 61 percent. More than a third of employers with more than 200 workers now tie at least part of an employee’s share of the bill to participating in a wellness program, Kaiser said.

Workers on family plans typically pay about a quarter of the premium costs, with their employers picking up the rest, according to the Kaiser data. Premiums rose 5 percent for individual coverage to $5,884, according to the statement.

The survey also found the 2010 health-care law extending its reach to more U.S. employers. Just 36 percent of covered workers were in “grandfathered” plans this year that are exempt from the act’s new requirements, down from 48 percent last year. Among other changes, the law requires employers to cover preventive services at no charge to workers and to let employees appeal denials of coverage.

Obama Delay

The Obama administration last month said it was postponing the law’s requirement that employers with 50 or more workers offer health benefits to full-time employees. The administration said the one-year delay would have a minor effect. Kaiser found 93 percent of such companies already offer insurance.

While the health law played a role, most of the slowdown in premiums probably is due to the economy, said Gary Claxton, lead investigator on the Kaiser study. Statistical models suggest a pickup in health-care spending typically lags about five years behind spending in the wider economy, he said.

“If and when the moderation in premium increases will end, that remains the debate,” Altman said. “If anybody tells you they know for sure, they don’t.”

To contact the reporter on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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