Health Care

Survey: Cost of health insurance rises for companies and workers

Annual premiums for employer-sponsored family health plans have reached more than $16,000, up 4 percent from last year, according to a survey from the Kaiser Family Foundation and Health Research and Educational Trust.

Workers pay an average of more than $4,500 toward the cost of their health care coverage, according to information released Tuesday by Kaiser.

The increase is not surprising, and most employers expect the costs of insurance to continue to climb, said Tim Witsman, Wichita Independent Business Association president.

“I think almost any employer would be happy if that were their number,” Witsman said of the 4 percent increase in costs. He said he’s anecdotally heard about much higher numbers from some area employers.

Nearly 52 percent of Kansans and 62.5 percent of all 19- to 64-year-olds are covered by employer-sponsored health plans, according to the Kansas Health Institute’s 2012 Annual Insurance Update.

This is the 15th year for the Kaiser survey, which includes information from more than 2,000 small and large employers across the country.

Drew Altman, Kaiser president and CEO, said in a conference call that this year’s 4 percent increase is relatively modest compared with previous years.

“People don’t perceive it as a small increase because what they pay for their share of premiums has gone up at a time when wages are flat or even declining,” Altman said. “The perception that people have is they still feel the pain of health care costs and worry about paying their health care bills.”

Premiums have increased 80 percent since 2003, according to the study.

And over those 10 years, workers have been asked to pay more and more of the premium costs, as business try to contain expenses.

As a result, the average worker’s contribution toward family health insurance premiums has climbed 89 percent, while wages grew 31 percent.

Those averages mean that someone who made $50,000 in 2003 now makes $65,500. But nearly 7 percent of that worker’s pay now covers the cost of health insurance – when about 4.8 percent of pay went for insurance in 2003.

One factor that has helped hold health care costs down, Altman said, is the economy.

“A slowdown in the economy causes people to use less health care,” Altman said.

Blue Cross and Blue Shield of Kansas spokeswoman Mary Beth Chambers said that’s what she has observed.

“Most everyone, for any procedure, is going to pay something out of pocket, so when the economy is not moving rapidly, you do not see as many services happening,” Chambers said.

“Obviously, some services are life and death, and those happen, but you might have someone who wants a knee replacement say ‘I can live with the pain a little longer,’ and put it off because they don’t want to pay the deductible.”

Chambers said the company does not release its average premium, but in the last year, employer groups have had increases – some smaller than others – while others have held stable.

She thinks the implementation of additional parts of the Affordable Care Act in the next year will affect individuals and smaller employers more than larger employers.

“For larger employers (with more than 50 employees), a chunk of the premium is based on their claims experience,” Chambers said.

Despite the Affordable Care Act mandate requiring employers to offer health insurance being delayed a year, 93 percent of firms with more than 50 employees will offer health insurance, according to the survey.

However, firms with lower-wage workers or more than 35 percent of workers younger than 26 are less likely to offer benefits than the average firm.

Wellness programs

More than one-third of firms surveyed thought wellness programs were effective, but the evidence supporting that belief is shaky.

Wellness programs are “en vogue now despite the fact that the literature is mixed, equivocal or evolving,” Altman said.

The survey showed that 99 percent of large firms of 200 workers or more and 76 percent of smaller firms offer at least one wellness program.

Witsman said that most wellness programs in Wichita are in larger companies with human resources departments.

“In smaller businesses, there’s less time for that,” Witsman said. “You also get into the issues of privacy. … If you want that kind of thing in a smaller business, you’re better off building it through the medical home or family practice. People pay more attention to their doctor.”

Witsman said that while he thinks wellness plans are generally a good idea, the way they are executed doesn’t always work.

“The knowledge that people who are overweight, smoke and other things clearly leads to higher medical costs. The question is ‘Does the way the plan is implemented in fact achieve these goals?’ Over and over, we see the problem, we think we know the solution and try it, and it doesn’t fit human behavior.”

Contributing: Associated Press