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Workers pay higher health costs

By Jay MacDonald ·
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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October 18, 2013 at 6:36 pm

@John. No need to leave the USA. Don't sign-up. There are no crimminal penalties or fines if you do not; its the (AHCA) law!

October 18, 2013 at 6:21 pm

the tea party needs obamacare more than the poor un insured, for they are sick, delusional, and just had a self lit stink bomb blow up in their face.

October 18, 2013 at 6:19 pm

Politics in this country is a sham, I think some sort of electronic voting,since their already monitor us. Make it like a game show, every Sunday night 6:oopm.-7:00pm. EST. A Panel (and we vote on too)to bring issues before us and we vote and the results are shone on a side bar as they come in.During the week you'll get updates on how you voted vs. others. So will your Congresspersons( Fed's& State)so they get a picture on how they to vote. Oh, for the prize, they get to keep their JOB.

October 18, 2013 at 6:12 pm

Before I will sign up for Obamacare I will disown the United States of America and leave this country. Slavery has been over with for years. What give him the right to make laws with out it going for a vote by the people of the United States we need to fire all of them and get people in there that will do the job. Politians in the senate and the house should not be making over $65,000 a year and the president shoud not be over $125,000 a year and they all need to pay for their own vacations not us paying for them. Again I will disown the USA before I sign up for Obamacare. (you all will proably block this becasue this is not want you want to see or hear)

October 18, 2013 at 5:57 pm

Look, all the younger people just need not purchase insurance and obrothercare will just go away. The goobertment can't afford to build all those prisons to house those despicable youngsters.

October 18, 2013 at 5:55 pm

It's not only the morons that put him in office that are to blame - the rest of us should share the blame as well.

I agree with you, Jane. However, we the people have given our elected civil servants all of the power they now wield, and continue to give them more each day. Career politicians are doing exactly what we would expect them to do - further their careers. And it is a rare occasion when the will of the people, or the best interests of the people coincides with the furthering of politicians careers.

Reducing the perks of office, and limiting terms will work against career politicians. Eliminating career politicians will reduce the effectiveness and influence of lobbyists. It's past time to get back to a govt. for the people, by the people.

Dave G.
October 18, 2013 at 5:42 pm

The amount of insurance increase in the first paragraph is not even close to accurate. Sounds like a democrat statistic. My employer provided health care insurance has increased 120% in the last 4 years . This past year we had a increase of over 40%. Trying to explain the increases of health care excluding the affordable care act is like saying clouds have nothing to do with rain.

October 18, 2013 at 5:30 pm

NO! Obama lied to us? That cannot be, even though he lies all the time about everything. Would he lie about health care? It's the morons that put him in office that are to blame!

October 18, 2013 at 5:19 pm

In response to Ellyn, you really need to read the other comments posted by the other people. There is absolutely nothing affordable about the Affordable Care Act aka ObamaCare. This plan is designed to be placed on the backs of our younger generation, with the idea that they don't see a doctor as much as the older generation does. Our younger generation are starting to realize this, and are stating that they can not afford the monthly premiums, because they do not have good paying jobs.

I work for a large employer and my medical plan is being cut back, but yet I will have to pay more and get less of a medical plan. The reason is because my employer can not afford to pay the huge government penalty tax on our so called "Cadillac" plan. If the "Affordable Care Act" is such a great plan for everyone, then why doesn't our government make everyone enroll. There should be no exemptions for anyone. Great leaders lead by example. I see no leadership from our current administration, they have turned a deaf ear on the will of the people.

October 18, 2013 at 4:54 pm

This and other issues will continue until all gov employees from bottom level to very top have to pay the same as the rest of us do, let them get a taste of what its like to live on our income, perhaps voters will finally get sick and tired of all of this, and vote both parties out, and start all over again.
from as low as dog catcher to as high as president.
When are we going to get rid of the lobbiests, make politicians do their jobs by them selves, that's why they were elected to the position they have.
Get off your lazy duffs, and go vote next election, instead of saying it doesn't matter anyway, well, unless your election is in Florida and your name is Bush