Companies survive by shifting health care costs to workers
Health care costs are falling … for employers. A study released Thursday shows that employers are shifting a greater portion of total health care costs to workers. While the premiums employees pay for employer-sponsored health insurance rose significantly, the amount their employers contribute declined slightly. Analysts say the shift in health care costs is a corporate survival strategy as the U.S. economy continues to falter. A persistently high unemployment rate that shows no sign of decreasing leaves workers with little leverage to negotiate a better deal.
Employee premiums outpace wages
Health insurance premiums employees pay for employer-sponsored family coverage rose an average of 13.7 percent this year, according to a survey conducted by the Kaiser Family Foundation and the Health Research & Educational Trust. The amount that employers contribute fell by 0.9 percent. In coverage of the survey, the Washington Post reports that employees are paying an average of 30 percent of the premium for family coverage and 19 percent for single coverage. The workers’ share of health care costs is the highest in 12 years of the surveys. Since 2005, the employees’ share of premium payments have gone up 47 percent while overall health insurance costs have risen 27 percent. Over the same period, wages have increased 18 percent and the consumer price index, a measure of inflation, has risen 12 percent.
Job market gives employers the advantage
The recession and a difficult job market are the primary factors responsible for the rising cost of employee-paid premiums according to Deborah Chollet, an economist with a Washington research firm. Chollet told CNNMoney that companies cutting staffs to the bone are looking for other ways to save money in the face of low consumer demand. One of the remaining options available is to pass on more health care costs to workers. She said that in a strong job market, higher turnover helps companies contain health care costs. These days, people who still have jobs are holding on to them tenaciously. They also use their health benefits more.
Employees pay more, get less
Workers are paying a greater share of their health care costs and getting fewer health benefits in return. The Miami Herald’s coverage of the survey reports that 30 percent of employers cut benefits or increased out-of-pocket costs for employees. Employers are also raising annual deductibles and 23 percent raised employee premiums. Employer-sponsored insurance covers approximately 157 million Americans, down from 159 million in 2009. A greater percentage of companies provide health benefits this year–up to 69 percent from 60 percent in 2009. However, the survey report suggests that many companies that did not offer coverage did not survive the downturn, leaving a higher percentage of survivors that provide health benefits.