Premium increases are low in part because benefits have been decreased and employee contributions increased. Chris made this point yesterday in a comment on my post about low trend rates.
Is that really happening?
No, yes and hell yes.
There are two components of cost-shifting to employees – premium contributions and ‘point of care’ cost share – deductibles, copays, upper limits, and exclusions.
Re premium contributions, it looks like there has been little change(see the chart pack) in the percentage paid by employees over the last eight years – workers are paying 28% of family coverage costs and 16% for individual, up from 27% and 14% in 1999. But that only tells part of the story.
Health care costs have increased much faster than wages. Thus, the average family’s premium cost share was 5.1% in 2001; it is now 7.9%. (ibid, assuming income is 200% of the Federal Poverty Level).
Benefit design changes – now that’s a different story.
There are lots of ways companies can reduce their health insurance costs – increase employees’ share of the premium, raise deductibles and copays, reduce benefits, shift to tight HMO plans, motivate healthy behavior, or for the ultimate in cost reduction, require employees to pay the entire premium.
Copays for office visits have increased significantly over the last eight years (ibid) and deductibles are up.
For businesses switching to high-deductible plans, the savings are about a thousand bucks per employee, or about 16%.
A more employee-friendly approach is to incent healthy behavior by reducing copays and deductibles for workers who don’t smoke, maintain a reasonable weight and manage other health risks. (I like this a lot, as it is a reward, not a punishment, and actually does something positive for the employee and the business) This has the added benefit of reducing everyone’s costs – one employer in this program shaved their costs from 11.5% of wages to 7.5%.
What doesn’t show up in these reports and analyses, and would skew the numbers big-time if it did, is the ultimate cost-shift – employers dropping health insurance entirely. And they are – over the last seven years the percentage of employers offering health insurance has dropped by a full nine points, to 60%.
What does this all mean?
The statistics and research and studies don’t tell the entire story – and there’s no way they could. The reality is that many employers are doing their best to maintain coverage, but more and more families are losing their health insurance because employers just can’t afford it any more.
I have to agree with Charles. Having to pay higher copays and a higher deductible because you weight too much doesn’t sound very fair. Weight control is very complicated. Better to reward people who participate in a weight loss program – reward the effort not the end result. Since the majority of Americans are overwheight, it’s no surprise your model company was able to dramatically reduce costs.
Charles,
Did you fail reading comprehension on the SAT’s? Is an incentive for healthy behavior equivalent to discriminating against the fat, genetic illnessess, the elderly.
“Better to reward people who participate in a weight loss program – reward the effort not the end result. ”
No, sorry, this is backward.
The behavior that is desired is not “participation” – it’s weight loss. Eyes on the prize please.
Positive incentives which have indeterminate payoffs are clearly weaker than penalties as means of influencing behavior – despite the hopes and theorizing of people who wish it were otherwise.
Is weight loss really the goal? I thought it was improved health status (health-related quality of life) which may be influenced by weight which may be influenced by activity which may be influenced by…
Too often we use proxy end-points under the assumption that improving them improves HR-QOL, but the more inferences, the more wobbly the conclusion.
To be honest HR-QOL may not even be the right measure!
“Is weight loss really the goal? I thought it was improved health status”
You may have a good point.
All that remains to be done is to describe how health status could be improved without defining proxy end points.