Health Benefits In 2010: Premiums Rise Modestly, Workers Pay More Toward Coverage

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1 doi: /hlthaff HEALTH AFFAIRS 29, NO. 10 (2010): Project HOPE The People-to-People Health Foundation, Inc. By Gary Claxton, Bianca DiJulio, Heidi Whitmore, Jeremy D. Pickreign, Megan McHugh, Awo Osei-Anto, and Benjamin Finder Health Benefits In 2010: Premiums Rise Modestly, Workers Pay More Toward Coverage Gary Claxton kff.org) is vice president and director of the Health Care Marketplace Project at the Kaiser Family Foundation, in Washington, D.C. Bianca DiJulio is a principal policy analyst for the Health Care Marketplace Project. Heidi Whitmore is a senior research scientist for health policy and evaluation at the National Opinion Research Center (NORC), in Bethesda, Maryland. Jeremy D. Pickreign is a senior research scientist for health policy and evaluation at NORC, in Albany, New York. ABSTRACT Our annual analysis of health benefits contains findings from interviews of 2,046 public and private employers surveyed during January May Average annual premiums in 2010 were $5,049 for single coverage and $13,770 for family coverage up 5 percent and 3 percent from 2009, respectively. Workers paid more toward premiums in 2010, and more workers are in consumer-directed plans and plans with high deductibles than in Thirty percent of firms reported that they reduced the scope of benefits or increased cost sharing because of the recession. Surprisingly, the percentage of firms offering health benefits in 2010 increased to 69 percent, up from 60 percent in The change was largely driven by a thirteen-percentage-point increase in the number of firms with three to nine workers that offered benefits (up from 46 percent in 2009 to 59 percent in 2010). The reason for this increase is unclear. Megan McHugh is director of research at the Health Research and Educational Trust, in Chicago, Illinois. Awo Osei-Anto is a researcher at the Health Research and Educational Trust. Benjamin Finder is a policy analyst for the Health Care Marketplace Project. Employer-sponsored health insurance covers 157 million nonelderly Americans, making it the nation s leading source of health coverage. 1 This paper presents findings from the twelfth annual Kaiser Family Foundation/ Health Research and Educational Trust (Kaiser/ HRET) Survey of Employer-Sponsored Health Benefits, which covers premiums, plan types, cost sharing, and other plan features. The major findings include increases in premiums for both single and family coverage, up to $5,049 and $13,770, respectively; the percentage of workers with a deductible of $1,000 or more, from 22 percent in 2009 to 27 percent in 2010; and workers share of the premium a notable change from the steady share that workers have paid over the past decade. Enrollment in high-deductible plans with a savings option, such as a health reimbursement arrangement (HRA) or health savings account (HSA), increased significantly, from 8 percent in 2009 to 13 percent in Average premiums for such plans remain much lower than overall average premiums for both single and family coverage. Firms point to the economic downturn as a reason for increasing cost sharing, increasing the worker s portion of premiums, or reducing the scope of benefits. Study Data And Methods Sample For Survey The sample for the annual Kaiser/HRET employer health benefits survey includes private firms and nonfederal government employers with three or more workers. Computer-assisted telephone interviews were conducted with employee benefit managers during January May 2010 by National Research. A total of 2,046 firms completed the full survey, 76 percent of which had also participated in the 2008 or the 2009 survey, or both. The response rate was 47 percent overall and 48 percent among firms offering health benefits Health Affairs October :10

2 To increase sample size for the estimate of the percentage of firms offering coverage, we asked firms that declined to participate in the full survey whether or not they offer a health benefit to any employees. A total of 1,097 firms answered only this question. The response rate for this question was 73 percent. Analysis We used various statistical techniques to address the fact that some firms in the sample did not respond to the survey. This process involved developing weights from probabilities specific to employers, workers, covered workers, and workers by type of plan. To correct for nonresponse to specific items on the survey, we estimated missing data by replacing them with observed values from a firm of a similar size and industry. To account for design effects, we used the statistical package SUDAAN (Release 10.0) to calculate standard errors. Differences referred to in the text use a p value of 0.05 as the threshold for significance. A more detailed discussion of the methods is included in the online Appendix. 2 Survey Questions Each year, the survey asks benefit managers about how many employees are eligible and covered by the health benefits offered by the firm, and about the characteristics of the firm s largest health maintenance organization (HMO), preferred provider organization (PPO), point-of-service (POS) plan, and highdeductible health plan with a savings option. The last type of plan is a health plan with a deductible of at least $1,000 for single coverage and $2,000 for family coverage, offered with a health reimbursement arrangement or eligible for a health savings account, which are two different types of medical savings accounts. 3,4 Cost And Availability Of Coverage Cost Of Coverage The average annual cost of health coverage in 2010 was $5,049 for single coverage and $13,770 for family coverage (Exhibit 1). Average premiums in 2010 increased 5 percent for single coverage (from $4,824 in 2009) and 3 percent for family coverage (from $13,375 in 2009). During this same period, general inflation increased 2.2 percent, and wages rose by 2.3 percent. 5,6 Average family premiums for workers in small firms (those with workers) are lower than premiums for workers in large firms (those with 200 or more workers) $13,250 versus $14,038 (Exhibit 2). For single coverage, the average premiums are similar for workers in small firms and workers in large firms $5,046 and $5,050, respectively. By plan type, premiums for covered workers in high-deductible health plans with a savings option are lower than the overall average premiums for both single and family coverage $4,470, and $12,384, respectively. 7 Employee Premium Contributions Covered workers paid a larger share of the premium in 2010 than in 2009 a notable change from the constant share that workers have paid on average during the past decade. Covered workers now contribute 19 percent of the premium for single coverage (Exhibit 2), up from 17 percent in 2009, and 30 percent of the premium for family coverage, up from 27 percent in 2009 (only 2010 data shown). Workers in firms with a higher proportion of lower-wage workers (where 35 percent or more of workers earn $23,000 or less per year) on average pay a larger share of the premium than workers in other firms for single (24 percent Exhibit 1 Average Annual Premiums For Single And Family Coverage, Single coverage Family coverage Thousands of dollars Source Kaiser/HRET Survey of Employer-Sponsored Health Benefits, Note All of the estimates except 1999 (both single and family) and 2009 (single) are significantly different from the estimate for the previous year shown (p < 0:05). October :10 Health Affairs 1943

3 Exhibit 2 Average Annual Premiums And Worker Contributions For Single And Family Coverage, 2010 Total premium ($) Worker contribution ($) Worker contribution (%) Category Single Family Single Family Single Family All plans 5,049 13, , Plan type a PPO 5,124 14, , HMO 5,130 14,125 1,028** 4, POS 5,239 13, ,195** 19 39** HDHP/SO 4,470** 12,384** 632** 3,522 14** 28 Region b Northeast 5,484** 14,815** 1,123** 3, ** Midwest 5,009 13, , ** South 4,820** 13,238** 822** 4,300** 18 34** West 5,056 13, , Firm size b Small (3 199 workers) 5,046 13,250** 865 4,665** 18 36** Large (200 or more workers) 5,050 14,038** 917 3,652** 19 27** Source Kaiser/HRET Survey of Employer-Sponsored Health Benefits, Notes Data are weighted by covered workers. PPO is preferred provider organization. HMO is health maintenance organization. POS is point-of-service plan. HDHP/SO is high-deductible health plan with a savings option. a Significance indicators shown are for p values calculated for differences from all plans estimate. b Significance indicators shown are for p values calculated for differences from estimate for all other firms not in the indicated size or region category. **p < 0:05 versus 18 percent) and family coverage (35 percent versus 29 percent). Workers in firms with some union workers on average contribute a lower percentage toward family coverage than workers in firms without union members (24 percent versus 33 percent; data not shown). The average annual contribution increased for single coverage from $779 in 2009 to $899 in 2010, and for family coverage from $3,515 in 2009 to $3,997 in 2010 (only 2010 data shown in Exhibit 2). Workers contributions for single coverage are similar for workers in small firms and in large ones. That is a change from prior years, when workers in smaller firms contributed less on average for single coverage. For family coverage, worker contributions continue to vary by firm size. Employees in small firms contribute $4,665 on average, compared to $3,652 for employees from large firms (Exhibit 2). In 2010 we asked firms offering workers more than one health plan whether they offered financial incentives for workers to select lower-cost or higher-quality plans. Although 14 percent of employers reported offering workers a financial incentive to enroll in a lower-cost health plan, only 2 percent reported doing so to enroll in a higherquality plan (data not shown). Plan Enrollment Enrollment in highdeductible health plans with a savings option increased to 13 percent of covered workers, up from 8 percent in 2009 (Exhibit 3). PPOs remain the most common plan type, enrolling 58 percent of covered workers. HMOs enroll 19 percent of covered workers, followed by high-deductible health plans with a savings option (13 percent), POS plans (8 percent), and conventional fee-forservice plans (1 percent). The increase in enrollment in high-deductible plans marks a significant change in market share in Cost Sharing GENERAL ANNUAL DEDUCTIBLES: A general annual deductible is the amount an enrollee must pay before all or most services are covered by the health plan. For workers in plans with such deductibles, there were no significant changes in the average deductibles for each plan type for single or family coverage from 2009 to However, as a result of enrollment shifts to plan types with higher deductibles, about a quarter of all covered workers (27 percent) in 2010 have a deductible of $1,000 or more for single coverage, up from 22 percent in 2009 and 10 percent in Workers in small firms are more likely than workers in large firms to have a deductible of $1,000 or more (46 percent versus 17 percent). Data on the percentage of covered workers enrolled in a plan with a general annual deductible of $1,000 or more for single coverage, by firm size, are available in the Appendix. 2 Although workers in HMOs are generally less likely to have a deductible than workers in other plan types, the percentage of workers in HMOs with a deductible increased from 16 percent in 2009 to 28 percent in 2010 for single and family coverage (data for 2009 not shown). 8 As we have seen in previous years, covered 1944 Health Affairs October :10

4 Exhibit 3 Distribution Of Health Plan Enrollment For Covered Workers, By Type Of Plan, Selected Years Conventional HMO PPO POS HDHP/SO Percent Sources Kaiser/HRET Survey of Employer-Sponsored Health Benefits, ; Health Insurance Association of America (HIAA), 1988; KPMG Survey of Employer-Sponsored Health Benefits, 1993, Notes Because of the addition of a new category in 2006 (HDHP/SO), the difference in distribution of enrollment between 2005 and 2006 cannot be tested for significance. No statistical tests were conducted for years prior to Information was not obtained for POS plans in Statistical significance denotes difference from previous year shown. HMO is health maintenance organization. PPO is preferred provider organization. POS is point-ofservice plan. HDHP/SO is high-deductible health plan with a savings option. **p < 0:05 workers in small firms have higher average deductibles than do workers in larger firms. For PPOs, the most common plan type, the average deductible for workers with single coverage in small firms is $1,146, compared to $460 for workers in large firms (Exhibit 4). PHYSICIAN OFFICE VISITS: The majority of covered workers have a required copayment for office visits with a primary care (75 percent) or specialist physician (73 percent), in addition to any general deductible. Smaller proportions of workers pay coinsurance that is, a percentage of expenses incurred rather than a set copayment for primary care office visits (16 percent) or specialty care visits (17 percent). From 2009 to 2010, the average office visit copayment increased from $20 to $22 for a visit with a primary care physician and from $28 to $31 for a visit with a specialist (Exhibit 4; 2009 data not shown). 9 The average coinsurance for primary care or specialty office visits is 18 percent. Copayments remain the most common form of cost sharing for primary care office visits for covered workers in PPOs (80 percent), POS plans (90 percent), and HMOs (94 percent), as shown in Exhibit 4. However, workers in high-deductible health plans with a savings option are more likely to have coinsurance (51 percent) or no cost sharing (30 percent) after the deductible has been met, rather than copayments (15 percent) once the deductible has been met. EMERGENCY ROOM VISITS: When covered workers visit an emergency room, 61 percent have a copayment only, and 17 percent have coinsurance only; an additional 13 percent face both copayments and coinsurance (data not shown). However, for 72 percent of workers, cost sharing is waived if the person is admitted to the hospital. Similar to other types of cost sharing, copayments are more likely for workers in HMOs (85 percent), PPOs (62 percent), or POS plans (69 percent) than for workers in high-deductible plans with a savings option, who are more likely to have coinsurance (37 percent) or no cost sharing after the deductible has been met (31 percent) for emergency room visits. The average copayment is $107, and the average coinsurance is 17 percent. 9 PRESCRIPTION DRUGS: More than three in four covered workers (78 percent) have three or more tiers of cost sharing for prescription drugs. Generally, tiers are based on the type or cost of the drug and are associated with a health plan s placing a drug on a formulary or a preferred drug list, which classifies drugs as generic, preferred, or nonpreferred. Copayments are more prevalent than coinsurance for all four tiers. The average copayments for those with three- or four-tier October :10 Health Affairs 1945

5 Exhibit 4 Cost Sharing In Employer-Sponsored Health Plans, By Type Of Plan, 2010 HMO PPO POS HDHP/SO All plans Deductibles a Covered workers with a general annual deductible for single coverage 28% 77% 66% 100% b Average deductible for single coverage c Small firms (3 199 workers) $998 $1,146 $1,278 $2,216 b Large firms (200 or more workers) $354** $460** $687** $1,676** b All firms $601 $675 $1,048 $1,903 b Physician office visits, primary care d Covered workers with copay only 94% 80% 90% 15% 75% Average copay for primary care physician office visit $21** $22 $24** $25 $22 Covered workers with coinsurance only 1% 16% 4% 51% 16% Average workers with coinsurance for primary care physician office visit e 18% e 18% 18% Physician office visits, specialist Covered workers with copay only 93% 77% 90% 13% 73% Average copay for specialist physician office visit $29 $31 $36 $34 $31 Covered workers with coinsurance only 1% 17% 5% 50% 17% Average workers with coinsurance for specialist physician office visit e 18% e 18% 18% Source Kaiser/HRET Survey of Employer-Sponsored Health Benefits, Notes In 2010 the survey asked about the prevalence and cost of physician office visits separately for primary care and specialty care. Prior to 2010, the survey asked whether the plan had cost sharing for in-network office visits. If the plan had a copayment for office visits, we assumed that there was a copayment for both primary and specialty care visits. HMO is health maintenance organization. PPO is preferred provider organization. POS is point-of-service plan. HDHP/SO is high-deductible health plan with a savings option. a Significance indicators shown are for p values calculated for differenceswithinplantypefromsmallfirms. b Composite deductible that is not presented, because of the large variation in the percentage of firms with a deductible and the deductible values. c Average deductibles are calculated for covered workers with a general annual deductible for single coverage. d Significance indicators shown are for p values calculated for differences from all plans. e Not sufficient data. **p < 0:05 cost sharing are $11 for first-tier drugs, $28 for second-tier drugs (up from $27 in 2009), $49 for third-tier drugs (up from $46 in 2009), and $89 for fourth-tier drugs (data not shown). There was no statistically significant change in the average copayments for first-tier drugs or fourth-tier drugs from 2009 to Availability Of Coverage Surprisingly, the percentage of firms offering health benefits in 2010 increased, from 60 percent in 2009 to 69 percent in The change was largely driven by a thirteen-percentage-point increase in firms with three to nine workers that offered benefits, from 46 percent in 2009 to 59 percent. Although we have seen some fluctuation in this category in the past, the change in 2010 is the largest shift we have seen. The reasons for the change are unclear. Because of the poor economic climate in 2010, it is unlikely that many firms began offering coverage during the recession. A possible explanation is that firms that did not offer benefits were more likely than others to fail during the past year, leaving a higher percentage of firms that provided benefits. Because most workers are employed by large firms, the change in benefits at the smallest firms did not have a dramatic effect on the percentage of workers whose employers offered health benefits (93 percent in 2010 versus 91 percent in 2009) or the percentage of workers covered at their job (59 percent in both 2010 and 2009). Even in firms offering health benefits, many workers do not enroll in plans offered by their employer. In 2010, 63 percent of workers employed in firms that offered such benefits are covered by their employer, a similar percentage to Not all of the workers who do not have coverage through their employer remain uninsured: Some are covered through a spouse s employer or another source of coverage. High-Deductible Plans High-deductible plans with a savings option increased their market share in 2010, with enrollment rising to 13 percent of covered workers from 8 percent in 2009 (Exhibit 3). 3,4 Fifteen percent of employers offering health benefits offer high-deductible plans with a savings option, which is statistically similar to the 12 percent of firms that offered this plan type in Such plans are available at a higher percentage of large firms than small ones (25 percent versus 15 percent). A third of firms (34 percent) with 1,000 or more workers offer them up from 28 percent in 2009 (data not shown). As noted above, 13 percent of covered workers are enrolled in a high-deductible health plan with a savings option a significantly higher percentage than in The difference in enrollment in these plans between small firms and large ones in 2010 is not statistically different (16 percent and 12 percent, respectively). From 2009 to 2010, the percentage of workers in large 1946 Health Affairs October :10

6 firms enrolled in a high-deductible health plan with a savings option grew significantly, from 6 percent to 12 percent, while the percentage of workers in small firms enrolled in these plans remained statistically unchanged (13 percent in 2009 and 16 percent in 2010; data not shown). The increase in enrollment in these plans in 2010 was largely driven by the increase in enrollment in high-deductible health plans with a health reimbursement arrangement, which grew from 3 percent in 2009 to 7 percent in The proportion of workers enrolled in a health savings account qualified high-deductible health plan remains at 6 percent.workers in small firms are more likely to be enrolled (9 percent) in the qualified plans than workers in large firms (5 percent; data not shown). The average premiums, workers contributions to premiums, employers contributions to health reimbursement arrangements or health savings accounts, total spending, and deductible amounts for workers in high-deductible plans are presented in Exhibit 5. The average premiums for single coverage in high-deductible health plans and health reimbursement arrangements and for single and family coverage in health savings account qualified plans are lower than overall average premiums for workers in other plan types. Total spending (premium plus employer s contribution to the savings option) for single and family coverage is lower for health savings account qualified plans than for other plans. In addition to contributing to the premiums, employers offering high-deductible health plans with a savings option may also contribute to the workers health reimbursement arrangements or health savings accounts. Annual employer contributions to health reimbursement arrangements average $907 for employees with single coverage and $1,619 for employees with family coverage. The average employer contribution to health savings accounts are $558 for single coverage and $1,006 for family coverage (Exhibit 5). Not all employers make contributions to health savings accounts established by their workers. In 2010, the percentage of employers not contributing to these accounts more than doubled, from 29 percent in 2009 for both single and family coverage to 60 percent for single coverage and 61 percent for family coverage in In terms of covered workers, 35 percent do not receive an account contribution from their employer for single or family coverage. For employees of firms that contribute to the health savings accounts, the average annual contribution is Exhibit 5 High-Deductible Plan Features (Annual Plan Averages), By Type Of Plan, 2010 HDHP/HRA HSA-qualified HDHP Non-HDHP/SO plans a Single Family b Single Family b Single Family Premium c $4,702** $13,068 $4,233** $11,683** $5,136 $13,979 Worker contribution to premium c 799 3, ** 3, ,069 Deductible 1,737 3,577 2,096 4,006 d d Firm contribution to account 907 1, ,006 e e Total spending c 5,608** 14,687 4,791** 12,688** 5,136 13,979 Source Kaiser/HRET Survey of Employer-Sponsored Health Benefits, Notes HDHP/HRA is high-deductible health plan with a health reimbursement arrangement (HRA). HSA-qualified HDHP is health savings account (HSA) qualified high-deductible health plan. HDHP/SO is high-deductible health plan with a savings option. a To compare costs for HDHP/SOs to all other plans, we created composite variables excluding HDHP/SO data. The average firm contributions to HSAs for single coverage ($558) and family coverage ($1,006) include covered workers whose firm makes no contribution to the account. When those firms that do not contribute (60 percent for single coverage and 61 percent for family coverage) are excluded from the calculation, the average firm contribution to the HSA for covered workers is $858 for single coverage and $1,546 for family coverage. b Average deductibles for family coverage in HDHP/HRAs and HSA-qualified HDHPs are for plans that require an aggregate deductible amount, in which all family members out-of-pocket expenses count toward the deductible. About 16 percent of HDHP/HRA plans and 7 percent of HSA-qualified HDHPs had separate deductible amounts, in which each family member must meet an individual deductible. The average separate per person deductible for workers in HSA-qualified HDHPs is $2,738. There were insufficient cases to report an average separate deductible for workers in HDHP/HRAs. c Significance indicators shown are for p values calculated for difference from all non-hdhp/so plans estimate. d A composite deductible is not presented for all plans because of the large variation in the percentage of firms with a deductible and the deductible values. e There are no applicable all plan estimates for these categories because workers in other plan types do not receive account contributions. **p < 0:05 October :10 Health Affairs 1947

7 $858 for single coverage and $1,546 for family coverage (data not shown). As with PPOs, HMOs, and POS plans, average single and family deductibles in high-deductible health plans with a savings option did not increase since Workers in high-deductible health plans with health reimbursement arrangements have an average deductible of $1,737 for single coverage and an average aggregate family deductible of $3,577. Workers in health savings account qualified plans have an average deductible of $2,096 for single coverage and an average aggregate family deductible of $4,006 (Exhibit 5). Retiree Health Benefits In 2010, 28 percent of large firms offer retiree health benefits a similar percentage to the 30 percent offering the benefits in Ninety-three percent of large firms offering retiree health benefits offer coverage to early retirees (workers who retire before age sixty-five), and 75 percent offer coverage to Medicare-age retirees. Those percentages are statistically similar to the numbers from 2009 (data not shown). Employers Health Plan Practices Health Risk Assessments Health risk assessments typically include questions about an employee s medical history, health status, and lifestyle choices. The assessments can help identify potential health problems and target wellness or disease management interventions. Among firms offering health benefits, 11 percent give their employees the option to complete a health risk assessment; 55 percent of large firms and 10 percent of small firms provide this option (Exhibit 6). Among firms offering health risk assessments, 22 percent offer financial incentives to employees who complete the assessment. Large firms are much more likely than small firms (36 percent versus 19 percent) to do so. Some firms that offer financial incentives provide the following incentives for employees that complete a health risk assessment: a smaller share of the premium (14 percent); a smaller deductible (8 percent); a lower coinsurance rate (1 percent); or gift cards, travel, merchandise, or cash (39 percent). Wellness Programs The majority of firms offering health benefits (74 percent) 11 offer at least one of the following wellness programs in 2010: weight loss programs, gym membership discounts or on-site exercise facilities, smoking cessation programs, personal health coaching, classes in nutrition or healthy living, web-based resources for healthy living, or a wellness newsletter. The percentage of firms offering wellness benefits has increased since 2009 (from 58 percent in 2009). However, the increase was primarily the result of a higher percentage of firms reporting the availability of web-based resources for healthy living in 2010 (51 percent) than in 2009 (36 percent). Large firms are more likely than small firms to offer at least one wellness program (Exhibit 6). Among firms offering health benefits, relatively few with wellness benefits offer employees incentives to participate. One percent of firms reduce the premium share the worker must pay; 1 percent lower the worker s deductible; and Exhibit 6 Among Firms Offering Health Benefits, Percentage Offering Specific Benefits, By Firm Size, 2010 Benefit Small firms (3 199 workers) Large firms (200 or more workers) All firms Offer health risk assessments 10% 55%** 11% Among firms offering health risk assessments, percent that offer financial incentives to employees who complete assessment 19 36** 22 Offer at least one wellness program a 74 92** 74 Offer flexible spending accounts 15 77** 18 Permit employees to pay for premiums through a Section 125 plan b 54 92** 55 Review performance indicators 5 34** 6 Made changes as a result of the Mental Health Parity and Addiction Equity Act of 2008 c 26 43** 31 Reduced the scope of health benefits or increased cost sharing Increased the worker s share of the premium for health insurance 22 36** 23 Source Kaiser/HRET Survey of Employer-Sponsored Health Benefits, Note Statistical significance denotes difference from small firms estimate. a Includes weight loss programs, gym membership discounts or on-site exercise facilities, smoking cessation programs, personal health coaching, classes in nutrition or healthy living, webbased resources for healthy living, or a wellness newsletter. b Fifteen percent of firms responded not applicable for example, the firm pays for 100 percent of the cost of coverage. c Asked of firms with more than 50 workers. **p < 0: Health Affairs October :10

8 8 percent offer gift cards, travel, merchandise, or cash. Among firms that offer a high-deductible health plan with a savings option, 2 percent offer workers who participate in wellness programs higher contributions to the savings option. Before-Tax Spending The 2010 survey asked whether firms permit employees to spend pretax earnings on health insurance or health costs through the use of flexible spending accounts or cafeteria plans. These plans, established under Section 125 of the Internal Revenue Code, enable employees to pay for health-related expenses, including cost sharing, with before-tax dollars. Among firms that offer benefits, 15 percent of small firms and 77 percent of large firms offer flexible spending accounts (Exhibit 6). Fiftyfour percent of small firms and 92 percent of large ones permit employees to pay for their share of premiums through a Section 125 plan. 12 Dependent Coverage For their plan with the largest enrollment, we asked firms at what age dependents are no longer eligible for coverage, whether or not they are full-time students. The average age at which dependents are no longer eligible is twenty-one; 52 percent of firms reported ages eighteen or nineteen, and 12 percent reported twenty-six or older. The average age that dependents who are full-time students are no longer eligible for coverage is twenty-four; 6 percent of firms reported ages eighteen or nineteen, 45 percent reported ages twenty-four or twenty-five, and 21 percent reported age twenty-six or older (data not shown). 13 Quality Indicators In 2010 the survey asked firms that offer coverage if they review performance indicators for their health plans service or clinical quality. Six percent of firms do review performance indicators. Large firms are more likely than small firms to do so (Exhibit 6). Large firms that review performance indicators reported reviewing the following types of information: hospital outcomes data (76 percent), National Committee for Quality Assurance (NCQA) accreditation (58 percent), Consumer Assessment of Healthcare Providers and Systems (CAHPS) or another measure of consumer satisfaction (57 percent), Healthcare Effectiveness Data and Information Set (HEDIS) measures (33 percent), and URAC accreditation (23 percent). Mental Health Parity In 2008 the Mental Health Parity and Addiction Equity Act modified the 1996 Mental Health Parity Act to eliminate limits specific to mental health or substance abuse treatment and to require cost sharing to be the same for mental health and substance abuse treatments as for other types of health care. 14 The law does not apply to firms with fifty or fewer employees, so we asked firms with more than fifty workers if they changed the mental health benefits they offer as a result of the Mental Health Parity and Addiction Equity Act. Thirty-one percent responded that they had made changes, and large firms (200 workers or more) were more likely than small firms ( workers) to have done so (Exhibit 6). Among firms that changed their benefits, twothirds (66 percent) eliminated limits on coverage, 16 percent increased utilization management for mental health benefits, and 5 percent dropped coverage (data not shown). Responses To The Economic Downturn The survey included a few questions to determine whether employers have changed their benefits in response to the economic downturn. Thirty percent said that they had reduced the scope of health benefits or increased cost sharing, and 23 percent responded that they had increased the worker s share of the premium for health insurance (Exhibit 6). Large firms were more likely than small firms to report increasing the worker s share of the premium (36 percent versus 22 percent). Between 2009 and 2010, the percentage of large firms reporting that they had reduced the scope of benefits or increased cost sharing rose from 22 percent to 38 percent. The percentage of large firms reporting that they had increased the worker s share of the premium rose from 22 percent to 36 percent (Exhibit 6). Discussion The modest rate of premium growth that we have seen in recent years continued between 2009 and However, workers paid more as employers responded to the economic downturn by increasing employee contributions and reducing the scope of coverage.workers saw their share of premium costs increase for the first time in several years, and the percentage of workers enrolled in plans with deductibles of $1,000 or more continued to rise. Enrollment in high-deductible health plans with a savings option, which was flat in 2009, increased significantly in 2010, reaching 13 percent of covered workers. Increases in out-of-pocket burden for workers may well continue for the next several years. Rising health care costs, coupled with the slow economic recovery and continuing high unemployment, leave workers vulnerable to more cost shifting as employers struggle to lower their expenses. Alternatives that could slow cost growth in the near term such as a return to more tightly managed care or creating narrower, lower-cost networks have yet to take hold. October :10 Health Affairs 1949

9 Current plan structures, which favor open access and broad networks, were adopted in part as a response to the backlash against managed care on the part of both employers and employees. It is possible that these recent trends in growing out-of-pocket burdens may leave employers and employees more open to some of these limiting plan features as an alternative to further increases in cost sharing and contributions. The recently enacted Patient Protection and Affordable Care Act is unlikely, in the short run, to change the larger dynamics shaping the market for employer-provided coverage. Delivery system reforms, which hold the promise of longer-term savings for both public and private health coverage, will need at least several years before they have a meaningful impact on the premiums that employers and employees pay. Limits on deductibles (for small employers) and maximum out-of-pocket liability do not take effect until Several Affordable Care Act provisions such as limiting lifetime and annual caps on benefits and allowing children through age twenty-five to enroll in their parents health plans make nearterm improvements in coverage. However, they are not aimed at the issues of rising costs and shrinking coverage confronting employers and workers in this tough economy. The finding that 69 percent of employers offer health benefits was surprising, and we will continue to track the percentage of firms offering coverage to see if the 2010 result is an anomaly or if higher offer rates persist in the future. [Published online September 2, 2010.] NOTES 1 Kaiser Commission on Medicaid and the Uninsured. The uninsured: a primer [Internet]. Menlo Park (CA): Kaiser Family Foundation; 2009 Oct [cited 2010 Jul 1]. Available from: upload/ _data_tables.pdf 2 The Appendix can be accessed by clicking on the Appendix link in the box to the right of the article online. 3 Health reimbursement arrangements (HRAs) are medical care reimbursement plans established by employers that can be used by employees to pay for health care. They are funded solely by employers. There is no legal requirement for the minimum deductible in a plan offered with a health reimbursement arrangement. Health savings accounts are savings accounts created by individuals to pay for health care. An individual may establish an account if he or she is covered by a qualified health plan, which is a plan with a high deductible (a deductible of at least $1,200 for single coverage and $2,400 for family coverage in 2010) that also meets other requirements. Both employers and employees can contribute to a health savings account, up to a statutory cap. 4 For more information on highdeductible plans with a savings option, see Kaiser Family Foundation, Health Research and Educational Trust. Kaiser/HRET survey of employer health benefits [Internet]. Menlo Park (CA): KFF; 2010 Sep. Available from: insurance/8085/index.cfm 5 This and previous surveys use the April-to-April time period, as do the sources in this and the following note. U.S. Department of Labor, Bureau of Labor Statistics. Consumer Price Index, U.S. city average of annual inflation (April to April) [Internet]. Washington (DC): BLS; 2010 [cited 2010 Aug 16]. Available from: outside.jsp?survey=ce 6 U.S. Department of Labor, Bureau of Labor Statistics. Seasonally adjusted data from the Current Employment Statistics Survey (April to April) [Internet]. Washington (DC): BLS; 2010 [cited 2010 Aug 16]. Available from: outside.jsp?survey=cu 7 The premium averages for highdeductible health plan with a savings option do not include any employer contributions to the savings option. 8 There are two types of deductibles for family coverage: an aggregate deductible, in which all covered expenses from family members count toward meeting the deductible amount; and a separate, per person deductible, in which each family member must meet his or her own deductible amount before coverage begins. 9 The average copayments and the average coinsurance for primary and specialty care and emergency room visits include workers who have both types of cost sharing. 10 We now count the 0.46 percent of large firms that indicate that they offer retiree coverage but have no retirees as offering retiree health benefits. Historical numbers have been recalculated so that the results are comparable. 11 If those firms that offer other types of wellness programs are included, the percentage offering at least one wellness benefit is 76 percent. 12 Fifteen percent of firms responded not applicable to this question. Some of those firms pay 100 percent of the cost of coverage, for example. 13 Averages and distributions exclude 1 percent of firms, which have no limit on the age at which dependents are no longer are eligible for coverage for the plan with the largest enrollment, and another 2 percent of firms, which have no limit for dependents who are full-time students. 14 Centers for Medicare and Medicaid Services. The Mental Health Parity and Addiction Equity Act [Internet]. Baltimore (MD): CMS; 2010 Apr 14 [cited 2010 Aug 13]. Available from: reformforconsume/04_themental healthparityact.asp 1950 Health Affairs October :10