Premiums for Family Health Plans Hit $15,745

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family doctors officeBy RICARDO ALONSO-ZALDIVAR, Associated Press

WASHINGTON (AP) - It sounds like good news: Annual premiums for job-based family health plans went up only 4 percent this year.

But hang on to your wallets. Premiums averaged $15,745, with employees paying more than $4,300 of that, a glaring reminder that the nation's problem of unaffordable medical care is anything but solved.

The annual employer survey released Tuesday by two major research groups also highlighted another disturbing trend: employees at companies with many low-wage workers pay more money for skimpier insurance than what their counterparts at upscale firms get.

Overall, "it's historically a very moderate increase in premiums," said Drew Altman, president of the Kaiser Family Foundation, which conducted the survey with the Health Research & Educational Trust.

He quickly added: "But even a moderate increase feels really big to workers when their wages are flat or falling." The rise in premiums easily outpaced workers' raises and inflation.

Following a 9-percent hike in premiums last year, the 2012 increase quickly became fodder for the political debate. Republicans said President Barack Obama's promises to control health care costs ring hollow in light of the findings.

But the most significant cost-control measures in Obama's law have yet to take effect, and the president's big push to cover the uninsured doesn't start until 2014. Those cost measures include a new tax on the most expensive insurance plans and a powerful board to keep Medicare spending manageable.

Trying to head off critics, the administration issued a report that estimates consumers have saved $2 billion as a result of the health care law. That's due to a combination of insurance rebates for employers and individual policy holders, as well as closer state oversight of proposed rate increases, facilitated by Obama's law.

Still, the Kaiser survey shows premiums for job-based family coverage have risen by nearly $2,400 since 2009 when Obama took office, with a corresponding increase of nearly $800 for employee-only coverage.

Most independent experts say that reflects underlying problems with the health care system that have frustrated policymakers of both parties for years, not to mention corporate benefit managers.

Indeed, only last week an arm of the National Academy of Sciences estimated that about 30 cents of every dollar spent on health care - $750 billion a year - is wasted through unnecessary procedures, cumbersome paperwork, uncoordinated care and fraud.

Obama says he's working to make health care more affordable for all by leveraging the power of government programs like Medicare to pay hospitals and doctors for quality results, rather than sheer volume of tests and procedures. But that will take time.

Republican Mitt Romney wants to give future retirees a fixed amount of money to pick either private insurance or a government plan modeled on Medicare. He expects the private market will find ways to deliver quality service at lower cost. The GOP approach mirrors the shift away from traditional pensions, which pay a standard benefit, to 401(k) savings plans that limit the employer's exposure.

The Kaiser/HRET survey found that employee-only coverage went up 3 percent this year, with annual premiums averaging $5,615. Companies usually pick up a larger share of the cost for employee-only coverage, so workers typically paid about $950 of that.

Employer-based coverage, the mainstay for working people and their families, remained stable this year, with 61 percent of all companies offering health benefits. However, only half of companies with 3 to 9 workers offered health insurance, while virtually all large firms with 1,000 or more employees did so.

Companies continued shifting costs to their workers, but at a somewhat slower pace. A trend toward steering employees into plans with high annual deductibles eased a bit. The deductible is the amount you must pay each year before insurance kicks in. The survey found that 34 percent of workers are in plans with annual deductibles of at least $1,000 for single coverage, up from 31 percent in 2011.

"We don't know if it's a timeout, or if it's reached some natural limit," said Altman. "It's really something to watch for in the future because (high deductible plans) have an impact both on people's budgets and on holding down overall costs."

The survey's focus on health insurance provided to lower-wage workers highlights one of the major areas of uncertainty around Obama's health care law.

If the president is reelected and the law goes into full effect, employers with lots of low-wage workers may be tempted to drop coverage and send their employees into new state-based insurance exchanges, markets that will offer taxpayer-subsidized private insurance. A separate survey this summer by the Mercer benefits consulting firm found that 9 percent of employers in the retail and hospitality industries say it's likely they will drop coverage, even if they have to pay penalties to the government.

The survey found that workers in lower-wage companies pay $4,977 toward the cost of family coverage, as compared to an average of $4,316 for all workers. And the policy they get for their money is less generous, typically worth about $1,000 less.

"They are really paying more and getting less," said Altman. "That may not be surprising, but it is a striking finding."

Although employers and government are doubling down on efforts to keep health care costs manageable, most experts believe the sluggish economy provides the likeliest explanation for the moderate rise in premiums. Last year's spike is being blamed on a mistaken bet by insurers that the economy would recover faster.

The survey includes more than 2,000 small and large employers. Asked what kind of increase they're expecting for 2013, employers said their best estimate at this point is 7 percent - sure to prompt more pain.

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jkcow

Health Insurance is the biggest scam out there. They get to keep a 20%premium for all of their total medical expendatures. So it is understood the more they can payout the more profit they make..

September 11 2012 at 3:52 PM Report abuse rate up rate down Reply
Brek Randolph

The solution to health care cost is simple, yet impossible. For everyone to have 'healthcare,' meaning if you are sick you go to the hospital and the gov pays for it, you need a health care tax. It is that simple, but Americans what "free" health care and the freedom to do as they please.
The health care tax would be used to 'encourage' people to live a healthy life. After all keeping people out of the hospital would do the most to reduce costs. A health care tax would hit any activity that puts a burden on the health care system. Gasoline pollutes tax it a dollar or two, cigarettes, alcohol, even fast food, these are activities that need to be curbed. Come in for a physical, if you are in great shape a rebate, if fat you are off to a program and if you fail you get surcharged. This is how one fixes health care.

September 11 2012 at 3:29 PM Report abuse -1 rate up rate down Reply
FRED

Thank OBAMA AND HES SAVING US.//////////////////

September 11 2012 at 2:46 PM Report abuse -2 rate up rate down Reply
digitalmag

If everyone who pays health care premiums recognized that these premiums are effectively a tax collected by a private company, folks would really be upset by their tax rates. The premiums for my health insurance are 150% of my federal income tax and I get no coverage until the $3000 deductible is satisfied.

It's too bad we can't let the folks over at Medicare manage all health insurance, they do for only 3% above the actual cost of service. I would gladly give my premiums to them, after all if they screw up I can fire their bosses.

September 11 2012 at 11:40 AM Report abuse rate up rate down Reply