Employer Survey Shows Big Jump In Health Insurance Premiums
The good news: An estimated 2.3 million young adults under age 26 have been added to their parents' health plans as a result a provision of the 2010 Affordable Care Act. That's even more than the number estimated recently by the Census Bureau or the Centers for Disease Control and Prevention.
But the bad news is pretty bad. Premiums in 2011 jumped by 9 percent, with the average price for employer-provided family coverage topping the $15,000 mark for the first time. Ouch.
Even worse, says Drew Altman, Kaiser Family Foundation president and CEO, is that the increase comes at a time "when wages aren't going up, and in fact wages are actually declining in real terms, and that means that the increase is especially painful this year for working people."
The U.S. Chamber of Commerce says it's not at all surprised by the increases. "Unfortunately, as we highlighted for the country and for our members during the legislative debate, the health reform law will do nothing to control costs and instead will drive premiums higher," said Katie Mahoney, the chamber's executive director for health policy.
But Altman says that while the survey methodology doesn't allow Kaiser to determine the exact the reasons for the premium jump, one thing is clear: The health law is not the main culprit.
Opponents of the measure "blame everything on what they call Obamacare, including the weather," he says. But he says the foundation's best estimates from the survey are that the costs of the benefits already in effect — largely the young adult coverage and new preventive care without copays — are responsible for between 1 and 2 percentage points of the 9 percent increase.
He says the rest may have been the result of insurers gearing their premiums "to an expectation that the use of health services would go up because of an economic recovery that was starting and then it didn't happen."
For its part, the health insurance industry group America's Health Insurance Plans, or AHIP, issued a statement about the survey trying to take the blame off of its members. Among other things, AHIP says underlying medical costs are continuing to rise and that the recession has led to "a workforce that is older and has higher healthcare costs."
On the other hand, there may be reason to believe that Altman is right — that this year's increase was pegged to health care utilization increases that failed to materialize. The evidence is today's announcement by the White House increases in premiums for the closely-watched federal worker health insurance program for next year will average only 3.8 percent. That's barely half of this year's 7.3 percent increase.
Meanwhile, one of the other major trends in the survey is the rapid movement toward plans with high deductibles, with or without some sort of savings account from which people can pay health expenses.
More than half of all workers in businesses with fewer than 200 workers are now in health plans with deductibles of more than $1,000. And more workers are in plans with a $1,000 deductible and some sort of savings account than are enrolled in an HMO.
"There's a big argument among experts about whether these (high-deductible plans) are good for people or bad for people," says Altman. "But one thing we know they are; they're cheaper. As a result, he says, there's a major shift going on, almost under the radar. "Health insurance is becoming less and less comprehensive with these high-deductible plans."
MICHELE NORRIS, host: From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.
MELISSA BLOCK, host: And I'm Melissa Block. If you're paying more for health insurance this year, you're not alone. An annual survey out today shows premiums for employer policies spiked 9 percent in 2011, and that puts the average cost of a family policy above the $15,000 mark for the first time. NPR's Julie Rovner reports now on the debate over what caused the increase, and what happens next.
JULIE ROVNER: Before we get to the bad news about those higher premiums, there was one bright spot in the survey from the Kaiser Family Foundation and Health Research and Educational Trust.
DREW ALTMAN: There's a health-reform success story here, with the 2.3 million young adults covered on their family policies.
ROVNER: Drew Altman is president and CEO of the Kaiser Family Foundation. He's referring to the results of an early requirement of last year's health law, one that made most employers and insurers allow young adults up to age 26 to get back on their parents' health plans. But requirements like that one have led to accusations that last year's health law is at the heart of the increases. Katie Mahoney is executive director for health policy at the U.S. Chamber of Commerce.
KATIE MAHONEY: There are a lot of benefit mandates and coverage requirements that were prescribed by the health-reform laws. But health insurance, like any product, is a product that right now, we purchase in our country. And if you purchase a car that has leather seats and a sun roof, it's more expensive than an automatic with manual windows.
ROVNER: But with so few of the law's requirements already in effect, Altman says he's confident that the law is not the primary driver of the big increase. He says things like coverage for adult children, and new preventive benefits, are likely only responsible for one or two percentage points at most of the nine percentage point increase.
ALTMAN: We live in a time when those who don't like the health-reform law, they blame everything on what they call Obamacare, including the weather. But no, actually, the increase in premiums we see this year is not primarily a result of health reform.
ROVNER: So what caused the rest? It's only speculation, he says, but it may well have to do with expectations by health insurers that the economy was about to recover, and with that recovery would come a return to a more robust use of medical care.
ALTMAN: So we think they geared their premiums at a higher premium 'cause they thought people were going to start using more health services again. And then they didn't.
ROVNER: Now, there appears to be some evidence that could be the case. Today, the federal government announced premiums for next year for the federal worker health plan. They're going up an average of 3.8 percent next year, or just about half the 2011 increase. Meanwhile, Altman says there's another, more overlooked trend in the survey data: More and more people are being enrolled in so-called high deductible plans, where they have to pay at least a thousand dollars before their health insurance kicks in.
Some of those plans come with special savings accounts to help pay medical bills; some don't.
ALTMAN: I think what's really going on here is just under the radar screen. Without a lot of attention, without any national debate, we're seeing a real revolution in what health insurance is in our country today. So now, we have as many workers enrolled in these high-deductible plans with savings accounts as we have in HMOs.
ROVNER: There's a debate about whether these plans save money by encouraging people to use more appropriate care. Clearly, a major reason employers like them, though, is that they're cheaper. But these plans will be harder for some employers to offer when the rest of the law takes effect in 2014. That bothers opponents like the Chamber of Commerce's Katie Mahoney.
MAHONEY: Our concern is that the new law will take away those choices and harm affordability.
ROVNER: Which leaves the fight over health-care costs still to be solved. Julie Rovner, NPR News, Washington. Transcript provided by NPR, Copyright NPR.