01 Oct 2000 --- Employee benefits --- Image by © Koopman/CORBIS

Employer-Sponsored Health Plans Shift More Cost onto Workers

Health insurance costs for employers have risen this year, but not as much as in previous years. Premiums rose 3.4% in 2016, while it was greater in years before 2011. 3.4% is still faster than overall economic growth.

Employers are finding ways to cut costs, be it more affordable plans or placing more of the cost on workers in the form of higher deductibles and copayments. Workers and their families are using fewer medical services as well.

More than half of employer plans for a single person have a deductible (the amount paid out of pocket before the insurance kicks in) of at least $1,000, while family plan deductibles are even higher. Employers believe that exposing workers to the real costs of medical care will make them better shoppers when making their selections. These high deductible plans also save employers money. Since 2011, deductibles have increased 63% while earnings have increased only 11%.

A study of more than 1,900 companies, both small and large, showed that the increasing cost of health insurance is not causing employers to dump coverage or cut workers’ hours. Seven percent of companies shifted employees from part time to full time so they would be eligible for health insurance, while only two percent switched workers from full to part time.

Workers with high deductible plans spent $659 (13%) less per person than those with conventional plans. These same patients used 13% less inpatient hospital care, 10% less outpatient care, and 13% fewer prescriptions. It is hard to tell if the savings came from avoiding needless tests and procedures or skipping important treatment.

This consumer-driven insurance enables market forces with increased competition and price transparency. When patients are spending their own money, they will think about what treatments are important, less expensive, or unnecessary. Prices can be determined beforehand for elective procedures and lab tests. High deductible plans will become even more common over the next few years, so shopping around for medical care will be more prevalent too.

Hancock, Jay and Luthra, Shefali. “Studies: Employer Costs Slow As Consumers Use Less Care, Deductibles Soar.” News. Kaiser Health News, 14 Sep 2016. Web. 14 Sep 2016.

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