Small-company workers suffer most as health costs rise

The Kaiser Family Foundation has new confirmation for something benefits brokers and HR managers already know: the cost of employer-sponsored health coverage continues to rise at a faster rate than wage increases and inflation.

Result? Families pay more for employer-sponsored coverage, and generally receive fewer benefits through that coverage.

Annual premiums for employer-sponsored family coverage climbed nearly 4 percent this year to top $16,000 for the first time. The cost of single coverage rose almost 5 percent. Worker wages, meanwhile, climbed nearly 2 percent on average. 

Those wages have climbed about 31 percent since 2003. But the average contribution a worker makes to family health insurance has jumped 89 percent.

KFF teamed up with Health Research & Educational Trust, which actually did the research, to come up with its voluminous 2013 Employer Health Benefits Survey.

While reporting that premiums have increased nearly three times as fast as wages (31 percent) and inflation (27 percent), the surveyors did had a surprisingly optimistic summation of their findings.

“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,” Kaiser President and CEO Drew Altman said.

His counterpart at HRET also found cause to be upbeat: “Ensuring that workers have access to affordable coverage is important for our health care system and slower premium growth is supporting that,” said Maulik Joshi, president of HRET and senior vice president for research at the American Hospital Association.

Perhaps the families of those covered by small-firm (3-199 employees) employer-sponsored plans won’t see the cost situation as providing “breathing room” for themselves.

As the report notes, small firms comprise the vast majority of U.S. companies and employ a much higher percentage of the working population. The report breaks out data by large and small firms and also by firms employing higher percentages of low-wage workers — a group that pretty much overlaps with the small-firm group.

Employees with large firms do better financially when it comes to participating in employer plans – although their costs are rising right along with everyone else’s.

But the small firm data may be the most telling when attempting to spot health coverage trends. Consider this data from the report:

  • Firms with many lower-wage workers (at least 35 percent earning $23,000 or less annually) require workers to pay $1,363 more on average toward family premiums than workers at firms with fewer lower-wage workers ($5,818 vs. $4,455 annually).
     
  • The percentage of covered workers at small firms with a deductible of $1,000 or more increased significantly in 2013, to 58 percent from 49 percent in 2012. The large-firms data barely budged: 26 percent in 2012, 28 percent in 2013.
     
  • The lower-wage firms on average offer less costly coverage, too, creating a large disparity in the share of the premium that their workers pay (39 percent vs. 29 percent for those with large firms).
     
  • At small firms, 58 percent of covered workers now face deductibles of at least $1,000, including 31 percent who face deductibles of at least $2,000, up from 12 percent in 2008.
     
  • Firms with many low-wage workers are significantly less likely to offer health insurance than firms with few low-wage workers (23 percent and 60 percent, respectively).
     
  • Workers in small firms have higher average contributions for family coverage than those with large firms ($5,284 vs. $4,226).  
     
  • Workers in firms with a higher percentage of lower-wage workers have higher average contributions for single coverage ($1,234 vs. $979) and for family coverage ($5,818 vs. $4,455) than workers in firms with lower percentages of lower-wage workers.
     
  • Deductibles differ by firm size: for workers in plans with a deductible, the average deductible for single coverage is $1,715 in small firms compared to $884 for workers in larger firms.
     
  • Among all covered workers, 58 percent in small firms and 28 percent in larger firms are in a plan with a deductible of at least $1,000 for single coverage.

Overall, the researchers felt this year’s study only quantified the trend of more money for less coverage for workers. It concluded:

“The 2013 annual survey did not find major changes in employer-based health benefits.  Premiums increased at modest levels, consistent with the last several years, and coverage and offer rates did not change significantly. 

“Employers remain committed to wellness programs: most covered workers are in plans with some type of wellness program and a majority (67 percent) of employers believes that wellness programs are very or somewhat effective in controlling health care costs.”

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