Health-care costs grow nearly 4 times faster than wages

The cost of employer-sponsored family health coverage has increased nearly four times as much as wages and inflation since 1999, a national employer survey released Tuesday found.

The Kaiser Family Foundation and the Health Research & Educational Trust annual survey found that since 1999, the total premiums cost for health insurance increased 172 percent. In that same period, workers’ share of premiums rose 180 percent.

But wages only rose 47 percent in that period, while inflation rose 38 percent.

Nationally, premiums increased to an average of $15,745, an average increase of only 4 percent this year, the survey found for about the 149 million Americans covered by their employers.

That may seem like positive news, but it’s still a bigger bite out of the budget for working families whose incomes are either flat or falling, said Drew Altman, president and CEO of the Kaiser Family Foundation.

“What looks like relatively modest to experts doesn’t always feel that way to working people,” he said.

Last year’s average increase was about 9 percent. This year’s increase “continues the pattern we’ve been seeing lately of modest increases or very moderate increases, in health-care costs,” Altman said. “Four percent is a low increase, and it is good news.”

Altman and the researchers who compiled this year’s survey are not sure why the increase moderated.

“Is it a result of the economy recovering? Or is something happening in health care that’s holding down the costs?” Altman asked. “There’s mostly speculation and there’s not a lot of evidence. We really can’t say.”

One possibility is that last year’s increased was too high, he said, and actual utilization was not as high as insurers expected, which could have moderated the increase seen this year, Altman said.

For local business owners who have seen costs rise every year, even a relatively small increase means more pain.

“I’m actually surprised it’s only 4 percent,” said Chris Ferruso, legislative director of National Federation for Independent Business/Ohio. The Columbus-based organization represents small and independent business owners.

For Kelli Glasser, owner of Exhibit Concepts in Vandalia, planning for health-care costs is “absolutely painful, figuring out to try to find the right plan and work through the process that works for the company, that’s affordable for the company and that still provides a valuable benefit for our employees. It takes a lot of time. It takes a lot of effort.”

After haggling with their insurer this year, her company — which has 95 workers — saw its premiums increase between 4 and 6 percent, Glasser said. “It started well into the double digits,” she said, “probably in the teens.”

Like many small businesses, Exhibit Concepts offers its employees a high-deductible plan. Glasser said they switched from a traditional managed care plan some years ago to help control costs. Now, individual employees have a $5,000 annual deductible, while families have a $10,000 deductible.

Bowser-Morner, an engineering firm and testing lab based in Huber Heights, switched also to a high-deductible plan several years ago to try to contain costs. Employees have health savings accounts and the company kicks in “significant amounts” toward workers’ annual deductibles, said president and CEO Steve Bowser. The company has about 130 employees at six locations in Ohio, Illinois, Kentucky and Alabama.

Even with the switch to a high-deductible plan, the premiums keep going up, Bowser said. “Before we negotiate and tweak and do all those things, it’s been running in the 10 to 15 percent range,” he said.

The number of businesses offering high-deductible plans with savings options has increased more than seven-fold since 2005, when 4 percent of employers that offer coverage had the plans, the survey found among more than 2,000 small and large employers. This year, 31 percent of all employers offered high-deductible plans.

As costs rise, the number of employers offering coverage has fallen. In 1999, 66 percent of all firms offered health coverage, compared to 61 percent this year, according to the survey. For small businesses, those with three to 199 employees, the percentage has dropped from 55 percent in 1999 to 50 percent this year.

The survey comes a week after a report from 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.

Glasser said dropping coverage would be a last resort for her company.

“I hope it doesn’t come to that, because there really is value, I think, in being able to offer health insurance for our employees,” she said.

The question no one can answer is how much costs will rise next year, or the year after. Employers, such as Glasser, are especially worried about what’s coming in 2014, when, under the Patient Protection and Affordable Care Act, mandatory coverage and employer penalties kick in.

Mostly, she wonders if the plan available to her employees will meet federal requirements.

“They can’t give me advice,” she said. “They haven’t written those regulations yet. Maybe they’re going to say only plans with deductibles of up to $2,000 are acceptable. How much is that going to cost me? I have no idea. We’re just taking it one plan year at a time, and making those decisions the best we can.”

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