The New York Times, by Reed Abelson –
September 11, 2012:
A family with employer-provided health insurance now pays just under $16,000 in annual premiums, an increase of about 4 percent over a year ago, according to a study released Tuesday by the nonprofit Kaiser Family Foundation.
Individual policies purchased through an employer rose even less, increasing just 3 percent from last year to an average of $5,615, the study said.
“It is a year of very moderate increases in premiums and health care costs,” said Drew Altman, the chief executive and president of Kaiser, which tracks health care spending. The foundation surveys more than 2,000 small and large employers each year.
The increase, to $15,745 from $15,073, contrasts with the 9 percent increase Kaiser reported from 2010 to 2011, which gave rise to concerns that health care spending might begin rising rapidly again.
Kaiser said the lower premiums were a sign that the rise in health care costs continued to be modest. But the study’s authors were cautious about the explanation, wondering whether the smaller increases in recent years signaled the start of a long-term trend or were simply the result of a slow economy.
“We don’t know if health care premiums and costs will shoot back up and by how much when the economy improves,” Mr. Altman said. Insurers generally base the premiums they charge on what they expect the health care costs of their members will be.
Analysts generally agree that the deep recession and the sputtering recovery have helped keep health care spending — and insurance premiums — lower than the double-digit increases experienced in 2004 and before. In 2002, for example, Kaiser reported a 13 percent jump.
Part of the reason, they say, is that many consumers have decided not to go to the doctor or have elective surgery during the downturn because of higher out-of-pocket costs.
About half of workers covered by employers now have a deductible of at least $1,000 for individual policies. In 2007, only 21 percent of workers had deductibles that high, according to Kaiser. The study is being published online by the journal Health Affairs.
The report also looked at differences between how much employees are paying for premiums in companies where at least 35 percent of workers earn $24,000 or less a year, compared with how much employees are paying where at least 35 percent of workers earn $55,000 a year.
Employers typically ask workers to pay some share of the overall premium cost out of their paychecks.
Kaiser found that workers at places with more low-wage employees paid on average $1,000 more in premiums than those working at places employing more higher-earning workers. The low-wage employees paid, on average, nearly $5,000 for their share of premiums, while higher-earning individuals paid about $4,000, on average.
Paul Ginsburg, the president of the Center for Studying Health System Change, a nonpartisan research group, cautioned against reading too much into survey results for any one year, especially since last year’s findings by Kaiser may have been high.
But, over all, he said, health care spending seemed to be relatively stable. “Recession and the slow recovery are probably the principal factor,” he said.
Some insurance executives are also cautious about predicting that health care spending will not rise rapidly, once the economy recovers. Many have been surprised at how much people have reduced their doctor visits. “I didn’t think I would see utilization this low, either,” said Janice Knight, an executive for Health Care Service Corporation, which operates Blue Cross Blue Shield health plans in states like Illinois and Texas.
Others speculate that there could be something more going on as both patients and doctors adapt to changes stemming from the federal health care law and a determination by private insurers to keep spending down.
When asked to share more of the cost of a branded prescription drug, for example, consumers were more willing to use generic medications, and the Affordable Care Act has numerous provisions that help rein in costs, said David Cutler, a health economist at Harvard University. “The slow economy is only part of it,” he said.
“Every data point makes me more likely to believe that this a fundamental change rather than just a temporary change,” said Mr. Cutler.