54% of U.S. employers in the market for new health insurance

John Egan

More than half of U.S. employers that provide health care benefits have been shopping for new coverage, a survey by the Kaiser Family Foundation and the Health Research & Educational Trust indicates.

Among the 54 percent of employers that reported shopping for new coverage within the past year, 18 percent had switched to a new carrier and 27 percent had changed their health insurance plans, the survey shows. In a 2010 survey by the foundation and the health trust, 60 percent of employers said they had shopped for new coverage.

Based on company size, the number of employers that reported shopping for a new health insurance plan or carrier breaks down this way:

• Three to 199 workers — 54 percent.
• 200 to 999 workers — 53 percent.
• 1,000 to 4,999 workers — 42 percent.
• 5,000 or more workers — 25 percent.

Employer-sponsored insurance is the top source of health insurance in the U.S., covering about 149 million people who aren’t elderly, according to the Kaiser Commission on Medicaid and the Uninsured.

4 percent premium hike: ‘A good year’

Thousands of American employers are considering changes in their health insurance as annual premiums for employer-sponsored family health coverage are on the rise. According to the survey, the average premium hit $15,745 this year, up 4 percent from 2011, with workers paying an average of $4,316 toward  their coverage.

“In terms of employee insurance costs, this year’s 4 percent increase qualifies as a good year, but it still takes a growing bite out of middle-class workers’ wages, which have been flat or falling in real terms,” Drew Altman, president and CEO of the Kaiser Family Foundation, says in a news release.

The survey questioned more than 2,000 small and large employers across the country. In the survey, employers said they’ve been told their health insurance premiums are being raised an average of 7 percent next year by their current insurers.

“These early reports may not match what employers and workers ultimately end up paying next year, as firms can raise deductibles or otherwise change the health benefits and plans they offer to lower premiums,” the Kaiser Family Foundation says.

‘Don’t be afraid of high deductibles’

Jeffrey Ingalls, president of insurance consultant and broker The Stratford Financial Group, says that to save money on health insurance, a business should consider scaling back benefits if the workforce contains a larger number of younger, healthy employees than older, less-healthy employees.

For instance, Ingalls says, an employer could ditch a health insurance plan that offers 100 percent coverage for in-network hospital stays and replace it with a plan that charges a co-pay or deductible for hospitalizations. The employer then could reimburse the co-pay or deductible tax-free through something called a health reimbursement arrangement (HRA). Ingalls says this sort of setup lets an employer offer a higher level of coverage while paying lower premiums.

Aimee Elizabeth, an entrepreneur who wrote “Poverty Sucks! How to Become a Self-Made Millionaire,” says: “Don’t be afraid of high deductibles – these can lower rates tremendously. And seriously, your employees don’t need to go running to the doctor for every case of the sniffles or a paper cut. Health care packages should be for catastrophic illnesses, not a scratch they can treat at home with peroxide and a Band-Aid.”

Altman, the foundation CEO, offers some optimism about the future for health insurance premiums paid by businesses. He says there’s “no reason to expect a return to double-digit increases in health insurance premiums anytime soon, if at all.”

However, he tempers that optimism by saying: “There is no bigger or more challenging problem in health care than controlling costs, and the recent good news about premium increases is no reason to assume the problem is solved or to back off of new efforts to address it.”