If you have private health insurance, the good news is you may be helping your employer keep its health care spending down.
The bad news is it’s coming out of your pocket.
The amount that people with private insurance still had to pay for hospital visits grew 37 percent from 2009 to 2013, a study finds. And it’s probably still going up.
The study, conducted by the University of Michigan and published today in JAMA Internal Medicine, adds to a growing body of evidence that suggests employers are using high-deductible plans to keep premium costs down.
It found that out-of-pocket costs increased 6.5 percent a year, on average, as overall health spending grew 2.9 percent annually. The average out-of-pocket cost of hospitalization was more than $1,000 over the five-year period, largely because of charges patients might not be aware of.
Out-of-pocket costs are those borne by individuals rather than their insurers. They include co-payments (a per-visit fee), deductibles (the amount that must be paid before insurance coverage kicks in), and co-insurance (the percentage of the hospital’s charge people must pay even after insurance kicks in). A separate, 2013 study in the Journal of Health Economics showed that only 14 percent of people understood what out-of-pocket costs, deductibles, coinsurance, and co-payments were.
During the study period, deductibles grew 86 percent and coinsurance costs rose 33 percent. Co-payment costs fell, but so did the number of insurance plans that charged them. Out-of-pocket costs exceeded the annual growth of insurance premiums—the payments that companies and workers make to buy health insurance—which increased 5.1 percent a year.
“Every year, people freak out about how high premiums have gotten and how they continue to grow exponentially, but [out-of-pocket costs are] actually growing even faster,” said Emily Adrion, first author of the Michigan study and a research fellow at the university’s Center for Healthcare Outcomes and Policy. A 2015 Kaiser Family Foundation survey of employers found that deductibles had been growing much more rapidly than premiums for several years.
The Kaiser study surveyed employers and drew conclusions based on the type of insurance plan. The Michigan study examined data from more than 50 million Americans between the ages of 18 and 64 with insurance plans offered by three major companies—Aetna, Humana and UnitedHealthcare. They pool their data through the Health Care Cost Institute, which partners with the university’s Institute for Healthcare Policy and Innovation. The 2013 data were the most recently pooled data available. Adrion received a grant from the Agency for Healthcare Research and Quality, a federal agency that funds research on health care practice.
Approximately 98 percent of patients in the data set had employer-sponsored health insurance plans.
“When it comes to insured people, you sort of assume that people with high-quality, employer-sponsored coverage aren’t subject to high costs,” Adrion said.
For those with “consumer-directed” health plans—policies with high deductibles paired with personal savings accounts for employees to use when care isn’t covered by insurance—the average out-of-pocket cost was approximately $1,200, about $600 less than for those with individual private plans.
“There’s a huge gap in people understanding different types of insurance plan designs,” said Dr. Brahmajee Nallamothu, a senior author of the study.
The study period ended just before the Affordable Care Act, or Obamacare, took effect in January 2014, but many of the trends have likely continued. A penalty for high premiums, known as the Cadillac tax, is also part of the ACA and is scheduled to go into effect in 2020, giving companies still more incentive to keep high-deductible plans. The 2015 Kaiser Family Foundation survey reported that 81 percent of people with employer-provided insurance have an annual deductible of about $1,300.
“You can assume that these trends continue onward,” Adrion said.
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