Health insurance premiums are expected to slow their rapid pace of inflation the past several years, but many workers are facing higher deductibles in their plans, according to a 200-page report released in late September.
Nationally, premiums rose just 5 percent this year, but they have more than doubled since 1999, according to a 200-page report published in late September by the Kaiser Family Foundation (KFF) and the Health Research and Educational Trust (HRET).
During the same nine-year period, workers”™ wages increased 34 percent and general inflation rose 29 percent.
Deductibles are rapidly on the rise, however, partly the result of increased adoption of health savings accounts that give workers the option of setting aside earnings on a tax-free basis in exchange for lower premiums than traditional plans. Health savings accounts have found particular favor among small businesses suffering the most volatility in their premiums each year.
Those plans are often coupled with high deductibles that employees must pay before coverage kicks in, however. Some 18 percent of workers face annual deductibles of at least $1,000 this year, up from 12 percent a year ago; and more than a third of workers at companies with fewer than 200 employees shell out quadruple-digit deductibles.
The upfront costs are compelling, however. In the Northeast, high-deductible health plans cost an average of $3,900 for single coverage and just over $10,100 for family coverage. By comparison, HMOs charged $5,200 and $14,100 on average; preferred provider organizations (PPO) plans charged $5,050 and $13,750; and point-of-service (POS) plans charged $5,100 and $13,350.
Under the state”™s Healthy NY plan, individuals can funnel up to $2,850 of earnings into a health savings account, roughly double that amount for a family policy. Deductibles are set at $1,150 for individuals and $2,300 for families.
Healthy NY members in high-deductible plans can also exclude prescription drug coverage to gain additional premium savings.
The high-deductible option got off to a slow start last year, with just 625 members signing up in the first five months the plan was offered.
In a survey, Healthy NY found that younger workers are tending to sign up for high-deductible accounts and tend to perceive themselves as healthier than traditional policyholders, illustrating a possible self-selection process in which individuals who have or fear ailments or injuries are bypassing high-deductible plans.
Six in 10 businesses polled by KFF and HRET cited lower costs as their primary reason for adopting high-deductible plans, and experts say that employees are doing so as well after seeing how it can increase their take-home pay each week ”“ while hoping they won”™t require a procedure in which the deductible kicks in.
“Most employees to date have gone along, thinking their out-of-pocket (expense) is rarely going to total to $1,000,” said David Lewis, CEO of OperationsInc, a human-resources consulting firm in Stamford, Conn. “The pushback is usually later in the year when people reach the number a bit sooner than anticipated, usually because they don”™t have a solid grasp on the reasonable and customary charge paid for each service provider ”¦Â Given the economic climate I would expect far more firms moving to plans like these despite (any) employee”™s protests. It”™s the best way to manage expense to a minimal increase in premium at renewal time.”
Still, just 4 percent of workers in the Northeast belong to a high-deductible plan, the lowest percentage of any region in the nation, compared to 53 percent for a PPO plan, 27 percent for an HMO and 15 percent in a POS plan.
