Public Opinion About Health Care - Employer-sponsored Health Plans

The Employer Health Benefits 2003 Annual Survey, conducted since 1999 by the Henry J. Kaiser Family Foundation and the Health Research and Educational Trust (Washington, DC, 2003), found that despite escalating premiums and increases in worker cost sharing, overall levels of coverage have not declined. In 2003 more than twothirds of all firms offered health coverage to their workers. The decision to offer health benefits varies by company size—nearly all firms with fifty or more workers offer health benefits. Benefits are offered by 84% of firms with twenty-five to forty-nine employees, 76% of firms with ten to twenty-four workers, and 55% of companies with three to nine employees. More than 90% of companies that employ union workers offer health benefits.

The survey revealed that as employers endeavor to rein in the rising cost of health insurance, the vast majority of workers pay for premiums and encounter substantial cost sharing (deductibles, coinsurance, and co-payments) for services such as office visits, prescription drugs, and hospital admissions. Nearly four in five workers pay a deductible before health care expenses are covered by their plans. More than two in five employees pay a separate deductible, co-payment, or coinsurance when they are admitted to a hospital, and almost all workers pay a copayment or coinsurance for physician office visits. The majority of workers also are in plans with cost-sharing arrangements for prescription drugs.

Rising Premiums and Reduced Benefits May Reduce Satisfaction with Employer-Sponsored Plans

Between May 2002 and May 2003, employer health insurance premiums rose 13.9%, which was the third consecutive year of double-digit insurance premium increases and the sharpest increase since 1990, according to the Employer Health Benefits 2003 Annual Survey. Average annual premiums rose to $3,383 for individual coverage and $9,068 for family coverage for employer-sponsored

FIGURE 9.7

plans. The percentage of premiums paid by workers was essentially unchanged over the last two years, at 16% for single coverage and 27% for family coverage. Health maintenance organizations (HMOs), which enrolled 24% of covered workers in 2003, remain the least costly, and preferred provider organizations (PPO plans), which enrolled more than half of all employees with health coverage, continue to offer the most expensive family coverage. Indemnity insurance, which provides reimbursement for medical expenses regardless of who provided the service, enrolled only 5% of employees.

The survey attributed the high rate of premium growth in 2003 to the combined effects of rapid inflation in the costs of health care services and insurers' intensified efforts to assure profitability. Employers attributed increases in health insurance premiums to higher spending for prescription drugs (61%) and higher spending for hospital services (55%). Skyrocketing premiums have prompted many employers to consider alternatives to their current health plans. More than 60% claimed that they shopped for a different arrangement, and 33% reported that they either changed carriers or plan type. Despite their enthusiasm for less costly alternatives, a scant 5% of employers opted to offer high deductible health plans (defined as plans with a deductible of $1,000 or more for single coverage), which have been extolled by insurers and benefit experts as effective methods to reduce health spending.

The survey also found retiree benefits dwindling—just 38% of large employers (two hundred or more workers) offer retiree benefits compared to 66% in 1988. Health care benefits administrators and industry observers contend that reduced benefits, higher costs, and fewer small employers offering coverage may combine to sharply reduce employee satisfaction with employer-sponsored health plans.