Even before Congress had passed health care reform, opponents were predicting immediate, sharp hikes in health insurance premiums. Since then, the drumbeat of impending doom only has gotten louder.
“Health care premiums are already soaring in advance of Obamacare,” Fox News reported just two weeks ago. That headline turns out to have been overstated.
The average cost of employer-provided health insurance rose just 3 percent this year, according to the authoritative Kaiser Family Foundation’s employer health benefits survey. That’s the lowest rate of increase since the mid-1990s.
Health insurance still is staggeringly expensive. The average cost of individual coverage now is $5,049. Employer-provided family coverage costs an average of $13,770. We pointed out last year that you can buy a car for less than it costs to insure a family. This year, it costs 3 percent more.
The cost of health insurance — especially for families — has skyrocketed in recent years. It’s up about 150 percent since 1998.
But those increases have nothing to do with health care reform. In fact, they’re one of the problems health care reform is designed to address.
Even with this year’s modest premium hike, many families will feel a greater pinch.
Since 2000, employers have been shifting more and more costs onto their workers. They’ve done it two ways: By hiking the portion of the insurance premiums that workers pay and by increasing co-payments and deductibles that must be met before full coverage kicks in.
While health insurance premiums climbed by an average of 114 percent since 2000, workers’ contributions to those costs grew by 147 percent.
In the same period, inflation was 31 percent and average wages increased by 42 percent.
More than a quarter of workers with individual coverage now are enrolled in plans that require a $1,000 deductible; 10 percent have deductibles of more than $2,000. In 2006, just 10 percent had a deductible of $1,000 or more.
This year, 30 percent of employers surveyed said they plan to increase co-pays and deductibles or reduce the scope of coverage for their workers. Another 23 percent said they plan to increase their workers’ share of the premiums.
The 3 percent average increase in premiums this year is matched by a 14 percent increase in workers’ share of health insurance premiums.
That means workers probably will absorb most of this year’s premium hike.
Those changes highlight an important trend.
“The coverage that workers get today is looking less and less like the coverage that their parents used to get,” explained Drew Altman, executive director of the Kaiser foundation. The biggest change, he said, is how comprehensive the coverage is — or rather, is not.
Two decades ago, so-called first-dollar coverage — plans that had no deductible — were common, and many workers made no contribution to the cost of their insurance. Today, those plans are rare.
Of course, premiums were dramatically lower then. The average cost of family coverage in 1998 was about $500 less than what it costs today to insure an individual.
The survey turned up the possible start of an encouraging trend: The percentage of companies offering health benefits to their workers rose to 69 percent. It was buoyed by a dramatic 13 percentage point rise in the number of small companies — those with fewer than 100 workers — that offer health benefits.
Researchers weren’t sure what to make of that change, especially in a recession. But they warn that it might be because significant numbers of companies that hadn’t been offering benefits went out of business during the deep recession.
One important caveat about the Kaiser survey: It only measures prices for group health insurance.
People who buy health insurance on their own probably will face price hikes greater than those who get coverage through their jobs.
But under health care reform, people who buy health insurance on their own may get a rebate next year. New rules going into effect require that insurance companies spend at least 80 percent of the premiums they collect on health care for those they cover.
Insurance companies traditionally have had much higher overhead on so-called individual health insurance policies — as much as 40 percent. In part, that’s because the cost of administering individual policies is much higher.
Companies that don’t meet the new standard will be required to rebate excess overhead costs to policy holders.
The new health care reform law also creates a host of incentives and tax credits for small businesses to cover their employees.
But the Kaiser survey showed that, on average, companies with fewer than 200 employees actually pay lower premiums than bigger companies. That may be because they offer less comprehensive coverage to their workers.
It shouldn’t be surprising that health care reform opponents were wrong about the reform’s immediate effect on premiums. After all, they are the same people who spent last summer fretting about “death panels” and “socialized medicine.”
They were wrong then, too. But that happens when you substitute ideology for facts.
