| NEW YORK
NEW YORK Aug 21 As American workers prepare for
the first open enrollment season of the Obamacare era, hints are
surfacing about what awaits them - higher deductibles, more
incentives for staying well and premium hikes that continue to
out-strip wages, albeit by more moderate amounts than in the
For coverage in 2014, the first year in which key parts of
the Affordable Care Act's healthcare reforms take effect,
premium increases will be about 5 percent, according to two
studies. While a significant feature of the healthcare law is to
mandate individual coverage through public insurance exchanges,
it also contains requirements on pricing and plan features for
Costs for families with employer coverage will rise 4
percent, to an average $16,351, of which workers will pay $4,565
in premiums, according to the 15th annual Employer Health
Benefits Survey by the Kaiser Family Foundation and the Health
Research & Educational Trust released Tuesday. The increase for
single workers was 5 percent, to $5,884, with the worker
typically paying $999.
Consulting firm Towers Watson predicted in its 2013 Health
Care Changes Ahead survey, released on Wednesday, that overall
healthcare costs will rise 5.2 percent, less than the 5.9
percent increase last year.
This is a shift in momentum from double-digit increases that
have been typical over many of the last 15 years - a move that
Kaiser's president and chief operating officer, Drew Altman,
said was good news.
But workers do not have much to cheer as the increases are
still double the rate of wage increases and four times the rate
of inflation, said Paul Fronstin, a senior research associate
with the Employee Benefit Research Institute, a nonpartisan
To the extent that premiums are being held in check, it is
because of changing practices by employers, according to the
studies. Employers are trimming perks like low patient co-pays
for services to avoid triggering the so-called Cadillac tax of
the healthcare law, which will start penalizing high-cost plans
In its survey of 420 large companies in July, Towers Watson
found that 60 percent of employers think their plan will qualify
as high-cost if they do not change their offerings. Some of the
changes they are considering are offering incentives for
positive behaviors like losing weight and increasing the share
of what employees pay with higher co-pays.
Employers in the Kaiser survey were very enthusiastic about
wellness programs that promote employee health with elements
like biometric screenings and smoking-cessation programs. But as
far as these programs leading to lower costs, "it's not clear
where the evidence is," said Gary Claxton, a vice president at
Kaiser and director of the study.
Fronstin gives the example of a plan that would offer free
diabetes medication, while at the same time raising deductibles.
"Something will be taken away while you'll see something else
being enhanced," he said.
Another element keeping the rise of premiums in check is the
continued growth of high-deductible health plans, which now
account for 20 percent of employer plans.
A family premium for a high-deductible plan is nearly 20
percent less than the contribution for a Preferred Provider
Organization (PPO) plan, according to Kaiser's study, a phone
survey of 2,067 employers which was conducted from January to
But that does not mean that overall healthcare costs are not
going up, as out-of-pocket elements including deductibles
continue to grow. The average this year for a single worker was
$1,135 compared with $1,097 in 2012. At smaller firms, 31
percent of workers face deductibles over $2,000, up 12 percent
Furthermore, there is evidence that the less employees earn,
the more they have to pay. Firms with lower-wage workers,
defined by the study as firms with 35 percent of their workforce
earning $23,000 or less, charge their workers higher premiums.
The average was $1,363 more per family than firms with
higher-paid workers. This coverage also tends to have fewer
features, resulting in the lower-paid workers paying more for
less, and taking up a higher portion of their income (39 percent
of income for low-wage workers versus 29 percent for
For the first time, the Kaiser study asked employers if they
were planning on switching their health insurance system to a
private health insurance exchange. In this plan design,
employers give a set amount to workers toward the purchase of a
plan they can choose on an open exchange listing several
providers. For 2014, 29 percent of employers with 5,000 or more
workers are considering this.
The respondents to Towers Watson were equally enthusiastic,
with 37 percent saying private exchanges will be a viable
alternative to traditional employer coverage in 2014, and 57
percent think it will be a good option by 2015.
EBRI's Fronstin says that in this year's open enrollment
season, very few employees will be sent to private exchanges.
Only two big companies have made the leap so far: Sears Holdings
Corp and Darden Restaurants Inc. "But at some
point, they might," he said.