Employers slow shift of health costs to workers.

Though the cost of employer-sponsored health care rose significantly this year, employers have not passed on all of the cost increases to employees, according to results of a survey released Sept. 9 by the nonprofit Henry J. Kaiser Family Foundation.

The 11.2 percent average increase

in employer-sponsored health coverage made 2004 the fourth straight year of double-digit increases. However, this is the first year since 1996 in which the rate of increase of the cost of such coverage decreased from the previous year, according to the foundation's report, a 164-page document released at a Washington, D.C., news conference.

Employers, workers and health professionals have been struggling to rein in health care costs in recent years without deep cuts in services or quality. The foundation report notes that health savings accounts (HSAs) linked to high-deductible employer-sponsored health insurance--touted as at least part of the solution--have yet to become common following the creation of HSAs by Congress last year.

The foundation--which is unrelated to Kaiser Permanente--reported that the average health insurance premium for family preferred provider organization (PPO) coverage has surpassed $10,000 per year. PPOs cover the majority of workers.

Sixty-one percent of all workers received health coverage from their employer at the time of the survey in early 2004, down just 1 percentage point from last year but 4 points lower than the peak of 65 percent three years ago. The report said the decline in employers with fewer than 200 employees that offer health coverage was probably a contributing factor.

It said workers on average contribute $558 of the $3,695 annual cost of single coverage and $2,661 of the $9,950 annual cost of family coverage toward premiums in all forms of employer-sponsored health care.

It's not news that health care costs are continuing to rise. But it's notable that cost sharing, or shifting the burden of cost increases from the employer to the employee, has not continued unabated.

"Cost sharing rose only modestly in 2004, compared to larger increases observed in recent years," stated the foundation report. However, it added, "While increases in deductibles ... are not significantly different from last year, increases since 2001 are significant. For example, deductibles for PPO plans ... rose by nearly 40% since 2001."

Among findings of the report:

* Employees face many forms of health care cost sharing. "More than three-quarters of workers with single coverage contribute to their monthly health insurance premium," and a similar proportion face "cost sharings such as co-payments for prescription drugs and office visits."

* Since last year, the percentage of insured workers with a $20 co-payment for office visits grew from 12 percent to 22 percent in health maintenance organization plans and rose from 14 percent to 36 percent in point-of-service plans.

* Annual deductibles in PPO plans, however, were "statistically unchanged" from 2003 to 2004, with deductibles averaging $287 for preferred providers and $558 for non-preferred providers.

* "Tiered" cost-sharing arrangements, in which the health plan varies enrollee cost sharing for network hospitals or physicians based on their costs and quality, remain uncommon.

* Most firms surveyed indicated they are likely to increase employee contributions to health plans in the near future, but "relatively low percentages" indicated they plan to raise deductibles (9 percent of respondents), office visit cost sharing (5 percent) or prescription drug copayments (5 percent) in the near future.

* Fifteen percent of health plans surveyed this year are providing fewer benefits for covered workers than last year, according to the report, but 6 percent are offering more benefits and 79 percent are offering the same as in 2003.