Insurance costs continue to squeeze workers

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Workers continue to be squeezed by rising insurance costs

Although health insurance costs have not exploded under the Affordable Care Act, as many critics said would happen, the law hasn't provided much relief to American workers either, according to a new study of employer-provided health benefits.

Workers nationwide and in Maryland continue to be squeezed by rising insurance costs, eroding benefits and stagnant wages, the report from the nonprofit Commonwealth Fund found.

Nationwide, the average contribution an employee made to an insurance premium in 2013 and the average deductible together represented 9.6 percent of the median income of American households with members under age 65.

That is up from 8.4 percent in 2010 and nearly double the 5.3 percent that households were paying for employer-provided health coverage in 2003.

"Workers are paying more but getting less protective benefits," the report's authors noted. "Although the Affordable Care Act offers a platform from which to build, securing a more affordable future will likely require action beyond those reforms, focusing on costs of care, particularly for the privately insured."

Insurance offered by employers is the primary source of health coverage in America, providing benefits to about 150 million people.

Although attention has been focused on new insurance marketplaces created by the health law to serve people without employer coverage, the law was also designed to preserve the employer system. Supporters of the law hoped it would modulate skyrocketing costs, which had dramatically pushed up premiums and cost-sharing through the 2000s.

While employer-based health insurance costs grew more slowly in 31 states after passage of the Affordable Care Act, they grew faster in Maryland, the report found.

Nationally, the average premium growth for an employee slowed to 4.1 percent from 2010 to 2013, compared with a rate of 5.1 percent from 2003 to 2010.

In Maryland, the premiums rose at a rate of 6.1 percent annually after the reform law passed and 4.9 percent before. The report authors couldn't explain why some states defied the trend.

In Maryland, an employee premium cost an average of $5,730 in 2013, up 67 percent from $3,427 in 2003. A family plan rose to $15,820 from $9,217 over the same period.

Employees generally pay only a portion of the amount, with employers contributing the rest.

Still Commonwealth Fund president Dr. David Blumenthal, who previously worked in the Obama administration, noted that the health law may have contributed in part to the slowdown in rising costs.

The law requires insurers to curtail administrative costs and provides new incentives to hospitals to improve quality and efficiency.

But experts give more credit for the smaller cost increases to the economic slowdown, which cut demand for health services, and increasingly aggressive efforts by employers to shift costs onto workers through higher deductibles and co-pays.

"There are a lot of things going on," said Paul Fronstin, senior research associate at the Employee Benefit Research Institute, which tracks employer coverage.

Deductibles more than doubled in many states in the 10-year study period, including in Maryland, where they rose to $1,075 from $389.

The employee's share of health care costs grew in every state over the past decade.

"All states have lost ground from an employee perspective," said Cathy Schoen, one of the report's authors.

The Commonwealth Fund report found the burden of health care costs on employees was particularly pronounced in lower-income states.

The combined average employee premium and deductible exceeded 10 percent of the median working-age household income in 17 states in 2013, according to the study.

In Texas and Florida, the total was more than 12 percent, while in high-income Maryland, that share is 7.1 percent.

"This report shows that national patterns of growing health cost burdens on workers are mirrored in every state," Blumenthal said in a conference call with reporters.

"Out-of-pocket costs are up in most states and incomes are not keeping pace. This is of concern since research shows that high health care cost burdens relative to income may lead people to avoid seeking needed health care."

Baltimore Sun reporter Meredith Cohn contributed to this article.

noam.levey@tribpub.com

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