By Martha Heberlein
Despite its declining role in recent years, employer-sponsored insurance is a staple of coverage in the U.S. and still accounts for the largest share of health coverage. In fact, in 2009, 56% of people were covered by some form of ESI. However, as the recently released annual Kaiser Family Foundation/Health Research and Educational Trust Employer Health Benefits Survey reports, there are some disturbing trends in the market.
Since 2000, average annual family premiums have steadily increased 114%, although the last year saw modest growth as average premiums increased 3% (from $13,375 to $13,770). The increase in premiums over the last decade has far out-paced growth in wages, as coverage grows increasingly unaffordable for families.
What is even more concerning than the rising premiums, however, is the increase in the employee contribution. Over the last decade, the share of premiums paid by a family has stayed relatively constant, fluctuating between 26% and 28% (see figure below). However, in the last year, the share increased to 30%, the first significant increase since the survey began in 1999. In 2010, workers will contribute, on average, $3,997 annually towards family coverage, up from $3,515 in 2009, representing almost a 14% increase in spending. As premiums increased only 3%, this increase represents a cost-shift from employers to their employees.
In addition to paying more, families are getting less for their money, as employers are trimming the breadth of coverage. In response to the poor economy, 30% of employers reduced the scope of health benefits or increased cost sharing. And as health costs continue to rise, we’ll likely continue to see cost shifting, as employers struggle to lower their expenses.