Employers and their workers are paying an average of 4 percent more this year in premiums for health insurance -- an increase that's more than double the rate of wage growth from last year.
Even so, the rate of premium growth stands as one of the lowest annual increases since 1999, a new survey found. It's also a far cry from the double-digit annual increases seen a decade ago.
The report, released Tuesday, Sept. 11, by the Kaiser Family Foundation, found that the average annual premium for employer-sponsored family coverage this year is $15,745, up from last year's average of $15,073.
The new survey also assessed the impact of the federal Affordable care Act since its approval by Congress in 2010 and going forward.
And it included less encouraging news for low-income workers. Compared with those at higher-wage firms, workers at low-wage firms are paying more money for insurance policies that come with skimpier benefits and smaller employer contributions, according to the Kaiser survey.
The differences help explain why a smaller share of workers at low-wage firms elect to buy into employer-sponsored plans, said Gary Claxton, a researcher with the Kaiser Foundation.
Minnesota employers cheered the lowered rate of premium increases, and state insurance companies say they've seen more modest growth in premiums this year, although the magnitude of increases for particular employer groups can vary significantly.
"It's trending in the right direction,"
said Kathryn Koch, the manager for compensation and benefits at Allete Inc., a Duluth-based energy company.Michelle Murray, benefits manager at St. Paul-based Hubbard Broadcasting, added: "If it could continue, that would be like winning the lottery."
The finding on lower-wage workers was neither new nor surprising, Claxton said during a conference call.
"This year's survey suggests that working families at the low end of the wage scale face significant out-of-pocket costs for coverage," Claxton said in a statement. "Firms with many lower-wage workers ask employees to pay more out-of-pocket than firms with many higher-wage workers even though the coverage itself tends to be less comprehensive."
But that stands to reason, said Paul Pelletier, director of business operations for Providers Choice Inc., a Minnetonka-based nonprofit.
"Those companies that can afford higher wages can afford higher benefits, too," Pelletier said.
Providers Choice, Hubbard Broadcasting and Allete were three of more than 2,000 companies nationwide surveyed by the California-based foundation for its annual report on trends in employer-sponsored health insurance.
The survey also provides several data points for analyzing the impact of the Affordable Care Act, which is designed to overhaul the nation's health care system.
One provision of the law, for example, called on employer health plans to allow people up to age 26 to be covered on their parents' health insurance. As a result, 2.9 million young adults are covered by employer plans, the Kaiser survey found, up from 2.3 million in 2011.
From 2002 to 2007, cumulative increases in family health insurance premiums were 51 percent, with annual growth rates reaching as high as 13 percent, according to Kaiser. From 2007 to 2012, however, cumulative increases moderated to 30 percent, according to the new report, with the lowest annual growth rate coming in 2010 at just 3 percent, rivaled by the 4 percent increase this year.
It's unclear why recent growth rates in premiums have been relatively modest, although some have theories that try to explain it.
"My sense is that the recession and slow (economic) recovery are responsible for much of the recent health spending and premium trends," said Drew Altman, president of the Kaiser Family Foundation, in a statement. "Increases in recent years in cost sharing through high-deductible plans have probably played a supporting role."
If workers should be cheering the relatively modest increases, the report suggests there's more applause coming from those who work at high-wage firms.
At high-wage companies where at least 35 percent of workers earn $55,000 or more a year, workers are paying just under $4,000 each for family coverage while their employers are kicking in another $12,459.
But at low-wage firms -- defined as companies where at least 35 percent of workers earn $24,000 or less per year -- employees must pay about $5,000 each. Those workers' employers are contributing an average of just $9,716.
Workers at low-wage firms also are more likely to face higher deductibles when seeking care, the report found. Claxton said it's difficult to say whether workers at low-wage firms will be better off as more provisions of the Affordable Care Act kick in.
"What will be worth watching is ... the extent to which employers are going to be required to offer coverage and include these lower-wage workers more completely in the coverage that's offered," he said.
In the future, the health law will make subsidies available for lower-income people to purchase individual insurance policies on health exchanges. Small businesses also will have the chance to buy coverage on exchanges, which will serve as new state-level marketplaces for insurance plans.
Larger businesses, meanwhile, will face penalties if they fail to provide employee coverage -- a requirement that creates a "pay or play" decision under which companies could decide that paying the fine is cheaper than providing coverage. The Kaiser survey found that 61 percent of firms this year are offering health benefits to their workers -- statistically unchanged from 2011.
"The percentage of firms offering health insurance and the percentage of workers covered by health insurance remained steady," researchers from Kaiser wrote in a summary of the survey's findings.
"In 2012, premiums increased moderately as the economy continued to recover slowly."
The Kaiser survey reported preliminary information on premiums for 2013 with employers saying they expect an average increase of 7 percent. But actual increases in premiums or per-employee costs could be more moderate, the report noted, if health plans opt to raise deductibles or make other changes to the value of health benefits.
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