Paying More for Health Insurance, Getting Less

Employer-sponsored insurance is the leading source of health insurance in America, covering about 157 million non-elderly workers and their families. But according to a new report by the Kaiser Family Foundation, challenging economic times are making such coverage more expensive and less effective for millions of people.

"With the economy struggling, businesses have been shifting more of the costs of health insurance to workers through premiums, deductibles and other cost-sharing," said Kaiser President and CEO Drew Altman, Ph.D., in a press release.

Workers, on average, are paying nearly $4,000 this year toward the cost of family health coverage, an increase of 14%, or $482, above what they paid last year, according to the survey. But family health premiums -- the total paid to the insurer, which includes both employee and employer contributions -- rose only 3%, to $13,770 on average in 2010. The disparity is explained by the fact that the average employer contribution did not increase, despite rising costs. Workers are making up the difference, paying 30% of the total premium, up from 27% in 2009.

And over the past decade, the annual premium for family coverage increased 114%, while the workers' share has grown by 147%, the survey said.

Similarly, single health premiums increased 5% in 2010 to reach $5,049 annually, but workers on average are paying 15%, or $120, more than what they paid in 2009. Forty-seven percent of covered workers are in single coverage plans. Covered workers contribute 19% of the total premium for single coverage on average, up from 17% last year.

"From a consumer perspective, the cost of health insurance just keeps going up faster than wages," Altman said. Indeed, the survey finds that since 2005, workers' contributions to premiums have gone up 47%. Overall premiums rose 27%, outpacing wage and inflation growth of 18% and 12%, respectively.

Benefits Shrinking Too

Altman adds that shifting the burden may be helping companies "to stem the rapid rise in premiums that we saw in the early 2000s, but it also means employer coverage is less comprehensive." This year, in response to the economic downturn, 23% of employers said they increased the worker's share, while 30% said they reduced the scope of all health benefits or increased cost sharing.

For example, many employers are raising the annual deductibles workers must pay. More than one in four covered workers (27%) now face annual deductibles of at least $1,000, up from 22% in 2009, the survey found. Among small firms (3-199 workers), nearly half of the covered employees (46%) face such deductibles.

But the higher burden on workers comes with other costs. "High out-of-pocket expenses and premiums affect health care decisions for patients. If premiums and costs continue to be shifted to consumers, households will face difficult choices, like forgoing needed care, or reexamining how they can best care for their families," said Dr. Maulik Joshi, president of Health Research & Educational Trust, which contributed to the report.

The report comes a few months after the health-reform bill was signed by President Barack Obama. But Altman told NPR the survey raises questions about affordability of health care for the majority of Americans. "While we were all focused on expanding coverage in the health reform debate ... what we call health insurance in the country has actually been changing an awful lot," he said. "So what most people get as health insurance today just doesn't look very much like the more comprehensive health insurance their parents got."

The Kaiser Family Foundation and the Health Research & Educational Trust conducted the survey from January to May, with 2,046 randomly selected businesses responding.