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Workers pay higher health costs

By Jay MacDonald · Bankrate.com
Friday, October 18, 2013
Posted: 6 am ET

The relentlessly rising cost of employer-based health insurance continued to moderate this year, in response to plan changes and vendor deals fueled by health care reform. But workers' share of their health insurance bills continued to rise, according to a new analysis from consulting firm Aon Hewitt.

First, the good news: Company health plan cost increases have slowed to a national average of 3.3 percent, the lowest annual increase in a decade and well below last year's 4.9 percent. Still, the average per-employee cost of health care has set a new record at $10,471, up $340 from last year's average of $10,131. In 2012, the average rose into five figures for the first time.

Meanwhile, large employers continue to shift more and more of their health care costs onto their workers.

Out-of-pocket costs jump nearly 13 percent

The average employee contribution for health coverage has risen from $2,200 last year to $2,303, representing 22 percent of the overall plan premium. The picture is no brighter for out-of-pocket expenses, where employees saw their average outlay for things like deductibles, copayments and coinsurance jump from $1,984 to $2,239. That 12.8 percent increase is more than double last year's 6.2 percent hike.

Health care cost increases varied by employer plan type. For example, the average cost nationwide of health maintenance organization (HMO) plans have risen 4.9 percent this year, down from 5.5 percent in 2012, and preferred provider organization (PPO) plans have gone up 2.7 percent, also down from 4.7 percent the previous year. However, point-of-service (POS) plans rose 4.5 percent, up from a 3.8 percent increase in 2012.

Your address makes a difference

Where you live also has an impact on your health spending. If you live in Washington, D.C., Los Angeles, Orange County or the Oakland-San Francisco-San Jose region of California, your health expenses have risen above the national average, while residents of Atlanta, Milwaukee and New York City have seen below-average increases this year.

Now the bad news: Aon Hewitt predicts that this year's 3.3 percent overall health cost increase will more than double next year to 6.7 percent, with an average employee paying $2,499 in premiums and $2,740 for out-of-pocket expenses. If this projection holds true, an employee's share of health care costs will have increased 150 percent over the past decade, from $2,011 in 2004 to $4,969 in 2014.

"There are many factors that contributed to the lower rate of premium increases we saw over the past two years that we don't expect to continue in the long-term," says Aon Hewitt chief health care actuary Tim Nimmer. "These include the lagged effect from the economic recession on health care spending and continued adjustments as employers and insurers phase out the conservatism that was reflected in earlier premiums due to uncertainty around economic conditions and health care reform."

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Jay MacDonald is a Bankrate contributing editor and co-author of "Future Millionaires' Guidebook," an e-book by Bankrate editors and reporters.

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28 Comments
james
October 21, 2013 at 2:59 pm

who is going to be able to pay the 7000 deductible for the obamacare?

deb
October 18, 2013 at 9:02 pm

Bernie has the right response, "We the People" must rise up and just say no to all that is being forced upon us. We need to energize and let those in Washington that they work for us and it is about time they do the job they we hired to do or we will fire the whole lot of them.

Laura
October 18, 2013 at 7:36 pm

Wow! As of January 2014, my Insurance Company cancels my Insurance and I have to sign up for the new Insurance at an extremely high cost. For just myself and two kids both age 19 will be $671.00 to $851.00 per month with a $5,000.00 deductible, twice to three times what it was costing me previously! My 19 year olds are my dependents, just graduated from High School. They can't apply for the subsidy because they "are" my dependents. I can't apply for subsidy because my husband's employer offers insurance that is higher than insurance I can get on my own. I feel like we were lied to by President Obama who said Premium costs would go down! HA!!
I cancelled my Insurance Oct 1st, I will take the hit at the end of the year. It comes down to: do I have a roof over my head? food on the table and that does not include College. How are these kids just getting out in the world to survive? Costs are going up, yet minimum wage is a joke!

C D Casey
October 18, 2013 at 7:21 pm

Workers pay higher health costs:
In response to Ellyn, what planet are you living on? The network was so badly set up that people cannot even get on it to find out what they will have for coverage. I have been watching all the horror stories regarding what people (who managed to get into the site) will be paying for their ACA and it is unbelievable. There is no one who will be paying less and getting more value. Anyway; when the government has control of your health; they own you and you are their puppet.

C. D. Casey
October 18, 2013 at 7:19 pm

Workers pay higher health costs:
In response to Ellyn, what planet are you living on? The network was so badly set up that people cannot even get on it to find out what they will have for coverage. I have been watching all the horror stories regarding what people (who managed to get into the site) will be paying for their ACA and it is unbelievable. There is no one who will be paying less and getting more value. Anyway; when the government has control of your health; they own you and you are their puppet.

John
October 18, 2013 at 7:12 pm

@chuck if you do not sign up for health care there are fines that will be taken out of your income tax for you and everyone in your family who does not have health care.

Trish
October 18, 2013 at 6:57 pm

I agree with most of what's being said. Only ELECTORAL votes count and not "we the people", which should have a say in a lot of what goes on in the USA and choices made. We're the ones losing and all senate, house and lobbyists & president should not get raises when we the people can't whether on welfare, social security or on jobs that can't afford but 1 - 2 % from 3-5 % in the past. Some of us are expected to live on $25,000 or less and still pay for some or all of our medical and politicians get 125,000 - 300,000 (or more) for a year and can't pay themselves as they have good coverage compared to what we get. To me, they are people as we are and why don't they have to do what we're made to do - aren't they "We the people" also ? Obamacare medical is not going to help in any way - but will put more money in their pockets. They even get to keep their wages when they aren't in office anymore and why -they lost their jobs as a lot of others and still taking our money. Why didn't they put the money they borrowed from Social Security back or quit giving it to people that never worked in the USA? We've been getting the shaft for years from the government as they don't care, they're getting our money anyway. And when we have oil here in the USA - why get it from someone else not in the US of A. Let's use our own supplies instead of Importing and paying out - it would save money.

bernie
October 18, 2013 at 6:50 pm

why is it that the goverment has there own retirment is it because thay can't live on s/s like we have too.lets recall all of them and start over, we the people of the US are the voice of the goverment or it was set up like that in the begining was it not.

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