Cost-sharing growing faster than premiums
September 14, 2014
The Kaiser Family Foundation released a survey about employer health benefits. On the positive side, annual premiums rose by only 3%, costing an average of $6,025 for individuals and $16,834 for families. Less positive news for the employee is that the average deductible (for plans with a general annual deductible) rose about 7%. In addition, the percentage of employees who have deductibles of $1,000 or more rose from 38% to 41% (nearly 8%). The statistics hold over a longer time period: on average, premiums rose about 25% since 2009, while the deductibles (among the plans that had one) rose more than 47% and the number of employees.
This isn't surprising to anyone following the industry. Cost-sharing is one important factor in slowing the growth of premiums. From the employers' perspective, a rise in premiums mean paying more for everyone who is covered. A rise in deductibles, however, only affects people who use medical services. So, the idea is that employers can avoid a larger increase when paying for everyone by allowing a smaller number (sometimes, much smaller) of employees pay for the first $X of health care expenses (where $X is the deductible). The tradeoff between premiums and deductibles also makes sense for the insurers in that they know that individuals will be less likely to consume health care services knowing that it is the individuals themselves that will pay for the initial coverage.
This shift in costs to the individual will result in a more sophisticated consumer of health care services. For example, now that they are more likely to be responsible for their costs, individuals might start asking "is that test (or procedure) really necessary?" Individuals will also likely start considering the different prices that different providers charge, starting with services that are considered routine (e.g. flu shot or MRI).