The New Health Dialogue

Health insurance costs went up -- by a relatively modest 3 percent in 2010 -- to nearly $14,000 for a family policy, according to a new survey released by the Kaiser Family Foundation. But virtually all the increase was passed on to the workers.

“It’s a big jump in what employees pay,” said Drew Altman, the president of the foundation. “It’s the first time I can remember seeing employers cope with rising health care costs by shifting virtually all the costs to workers.” And while costs are going up, the coverage itself is shrinking.

In a striking finding, (helpfully pointed out in a conference call by Megan McHugh of the Health Research and Educational Trust because not all of us would have necessarily made it all the way to page 7 of the summary...), employers do not seem to be paying a whole lot of attention to quality of the health plans they are buying for their workers and families, even though quality measures have become more abundant and accessible.  Even among big firms with 200 or more workers (and presumably more sophisticated and better staffed HR departments) only a third are reviewing performance indicators. The 2010  Employer Health Benefits Survey released by Kaiser and Health Research team said:

 In 2010, we asked firms whether they review performance indicators on health plans’ clinical and service quality. Large firms (200 or more workers) were more likely to review performance indicators than small firms (3–199 workers) (34% vs. 5%). Among those who reported reviewing performance indicators, the most common indicators used were the Consumer Assessment of Healthcare Providers and Systems (CAHPS) (77%) and hospital outcomes data (61%). Seventy-four percent reported that they were “somewhat satisfied” or “very satisfied” with the information available on health plan quality. However, only 49% reported that the information was “somewhat influential” or “very influential” in their decision to select health plans.

“This lack of comparison shopping based on quality is troubling,” McHugh said, suggesting that “employers are not holding health plans accountable for the care they are providing.” More competition based on quality can create stronger incentives to keep improving quality, an upward spiral. But in the current economic and health cost climate, “Price is what pushes things here,” noted Gary Claxton, a Kaiser Family Foundation Vice President and Director of the Foundation’s Health Care Marketplace Project.

The survey was done from January to May this year, so it includes a few months when the outcome of the Congressional health reform debate was uncertain. So the findings don’t  necessarily shed that much light on how companies are acting in anticipation of reform. It does show what companies do amidst a grinding economic downturn.

"The longer term trend that I want to underscore is that what workers pay for health insurance continues to go up much faster than their wages, while at the same time their insurance gets less comprehensive," Altman said. Insurance the workers do get, he said. "looks less and less like the more comprehensive coverage that their parents got."

Among the other findings:

• Preferred Provider Organizations (PPOs) remain popular, enrolling 58 percent of covered workers. Average PPO family premiums topped $14,000.
• More than one in four covered workers have annual deductibles of $1000 or more, with rates even higher (46 percent) for small businesses.
• Premiums rose 5 percent, to $5049 a year, for policies that cover only a worker – without dependents. The workers on average paid $899, up from $779 in 2009. Forty-seven percent of covered workers are in single coverage plans.
• Co-pays rose slightly for physician office visits, from  $20 to $22 for primary care and from $28 to $31 for specialty care.
• Wellness benefits are becoming more popular, and nearly three-fourths of employers offer some variant of this. But the "benefit" can be anything from a weight loss or smoking cessation program to access to a "healthy living" web site.

(See the chart pack here)