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Premiums for family health plans hit $15,745

By Ricardo Alonso-Zaldivar
Associated Press


WASHINGTON » It sounds like good news: Annual premiums for job-based family health plans went up only 4 percent this year.

But hang on to your wallets. Premiums averaged $15,745, with employees paying more than $4,300 of that, a glaring reminder that the nation's problem of unaffordable medical care is anything but solved.

The annual employer survey by two major research groups also highlighted another disturbing trend: employees at companies with many low-wage workers pay more money for skimpier insurance than what their counterparts at upscale firms get.

Overall, "it's historically a very moderate increase in premiums," said Drew Altman, president of the Kaiser Family Foundation, which conducted the survey with the Health Research & Educational Trust.

He quickly added: "But even a moderate increase feels really big to workers when their wages are flat or falling."

Last year's 9 percent increase in premiums was fodder for the political debate, with Republicans blaming President Barack Obama's health care law. However, Obama's big push to cover the uninsured doesn't get going until 2014, and his most significant cost-control measures take effect even later. Rising health care costs reflect underlying problems that have frustrated policymakers of both parties for years, not to mention corporate benefit managers.

The survey comes a week after a report from an arm of the National Academy of Sciences estimated that about 30 cents of every dollar spent on health care — $750 billion a year — is wasted through unnecessary procedures, cumbersome paperwork, uncoordinated care and fraud.

Obama says he's working to make health care more affordable for all by leveraging the power of government programs like Medicare to pay hospitals and doctors for quality results, rather than sheer volume of tests and procedures. But that will take time.

Republican Mitt Romney wants to give future retirees a fixed amount of money to pick either private insurance or a government plan modeled on Medicare. He expects the private market will find ways to deliver quality service at lower cost. The GOP approach mirrors the shift away from traditional pensions, which pay a standard benefit, to 401(k) savings plans that limit the employer's exposure.

The Kaiser/HRET survey found that employee-only coverage went up 3 percent this year, with annual premiums averaging $5,615. Companies usually pick up a larger share of the cost for employee-only coverage, so workers typically paid about $950 of that.

The rise in premiums easily outpaced workers' raises and inflation.

Employer-based coverage, the mainstay for working people and their families, remained stable this year, with 61 percent of all companies offering health benefits. However, only half of companies with 3 to 9 workers offered health insurance, while virtually all large firms with 1,000 or more employees did so.

A trend toward shifting workers into plans with high annual deductibles seems to have slowed somewhat. The deductible is the amount you must pay each year before insurance kicks in. The survey found that 34 percent of workers are in plans with annual deductibles of at least $1,000 for single coverage, up from 31 percent in 2011.

"We don't know if it's a timeout, or if it's reached some natural limit," said Altman. "It's really something to watch for in the future because (high deductible plans) have an impact both on people's budgets and on holding down overall costs."

The survey's focus on health insurance provided to lower-wage workers highlights one of the major areas of uncertainty around Obama's health care law.

If the president is reelected and the law goes into full effect, employers with lots of low-wage workers may be tempted to drop coverage and send their employees into new state-based insurance exchanges, markets that will offer taxpayer-subsidized private insurance. A separate survey this summer by the Mercer benefits consulting firm found that 9 percent of employers in the retail and hospitality industries say it's likely they will drop coverage, even if they have to pay penalties to the government.

The survey found that workers in lower-wage companies pay $4,977 toward the cost of family coverage, as compared to an average of $4,316 for all workers. And the policy they get for their money is less generous, typically worth about $1,000 less.

"They are really paying more and getting less," said Altman. "That may not be surprising, but it is a striking finding."

Although employers and government are doubling down on efforts to keep health care costs manageable, most experts believe the sluggish economy provides the likeliest explanation for the moderate rise in premiums. Last year's spike is being blamed on a mistaken bet by insurers that the economy would recover faster.

The survey includes more than 2,000 small and large employers. Asked what kind of increase they're expecting for 2013, employers said their best estimate at this point is 7 percent.

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JPC wrote:
There are many thousands that are caught in the middle of this; I'm one of them with zero health plan. I feel lucky to just be in good health for now; but later down the road of life healthy or not we will all come to our demise in God's hands.
on September 11,2012 | 07:14AM
LanaUlulani wrote:

ObamaCare ObamaTax should be repealed. Not only will WE be forced to opt in WE face a PENALTY and a TAX if we are not able to buy health insurance. How does the GOVERNMENT expect us to afford to pay the PENALTY and TAX if we do not have any money to even buy health insurance ?!!!

Obama is HEWA !!!

on September 11,2012 | 08:53AM
LadyNinja wrote:
Does anyone know how much politics plays in this scenario? The insurance regulations for Hawaii specifically prohibit some of the major health insurers to do business in Hawaii. Dental insurance is one of the areas as well as numerous health insurers. I understand the legislation but too much of a thing is too much politics.
on September 11,2012 | 09:07AM
HD36 wrote:
Whenever the government gets involved with something, my experience is that it eventually goes up and becomes more expensive. One of the reasons, is that you have to support the millions of government workers that will administer the program. Without any competition, there's no incentive to innovate and make things cheaper. Just look at things that have minimal government interference and are governed by free market principles, ie.. cell phones, and computers. Most have gotten alot better and cheaper. Government interference in higher education through student loans and housing through Freddie and Fannie caused these sectors to skyrocket in price.
on September 11,2012 | 10:18AM
RetiredWorking wrote:
Millions of government workers just to administer the program? Really?
on September 11,2012 | 07:26PM
HD36 wrote:
Perhaps not, but millionsof dollars to pay those workers for sure.
on September 11,2012 | 09:00PM
Manoa2 wrote:
Government? No-- Obamacare is a private insurance plan run by private insurance companies with care by private physicians. Just like Romneycare in Massachusetts-- everybody buys insurance and that brings the cost down because the pool is greater and insurance companies compete in a private market to provide policies. It wasn't even Obama who thought of this-- It was an idea Obama copied from Republicans like Romney and Gingrich who wanted private insurance plans that everyone had to buy.
on September 11,2012 | 10:29PM
HAJAA1 wrote:
I pay over $4k a year but I have a family and I'm fine with that as I have great coverage. But what irritates me most are co-pays. All it is - a deterent from taking advantage of services you already pay big money for each year. HATE copays to no end!!
on September 11,2012 | 11:28AM
onevoice82 wrote:
Did you know Co-Pays are mandatory by LAW! Ask your doctor......they are forced to charge a co-pay even if they do not want too. Go fiqure that one out! ;-/
on September 11,2012 | 05:13PM
RetiredWorking wrote:
I pay $3462 annually for wifey. God bless Medicare.
on September 11,2012 | 07:31PM
false wrote:
I'm self-employed and pay $777 a month for a couple, or $9,324 a year for my HMO plan through HMSA. I used to carry a preferred provider (PPP) family plan with vision and drug coverage that currently would cost about $18,000 a year, but the cost was killing me and I had to let it go. You wonder why companies aren't hiring. This is one good reason. When it costs an extra $10,000 to cover every employee you hire, you decide to make do with fewer employees, which stifles growth, or just not hire full-time employees. If the Republicans insist on cutting costs, their focus should be on cutting the cost of medical coverage and taking the burden off of businesses instead of chipping away at medical and social security benefits. That would encourage businesses to do more hiring, and put more discretionary income into the pockets of employees, who could then spend it with other businesses, spurring the economy. But that would mean taking on the insurance and health care lobbies, which butter the bread of most Republican legislators. So, it ain't gonna happen.
on September 11,2012 | 11:30AM
hawaiikone wrote:
Loosening interstate regulations and serious tort reform would help a lot, but guess who opposes those changes. Hint. It ain't the GOP.
on September 11,2012 | 03:13PM
HD36 wrote:
If employers weren't required to pay for health care, employees would get more pay, and they could shop around for cheaper or better insurance coverage.
on September 11,2012 | 03:26PM
false wrote:
People who are blaming this on Obama are simply ignorant. Insurance costs have been going up rapidly and regularly for the past ten years.
on September 11,2012 | 11:35AM
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