Health insurance premiums rise a moderate 4%

The price of health insurance provided by employers rose a moderate 4% this year, a major survey shows, but experts warn that rates may climb higher next year.

Annual insurance premiums for families increased 4%, on average, to $15,745, according to the survey by the Kaiser Family Foundation and the Health Research & Educational Trust. That was down from a 9% hike in 2011.

Still, even modest increases in healthcare costs are difficult to absorb for many businesses and workers struggling to cope with a sluggish economy. Health premiums have been on an unrelenting march upward for years, and many employers have shifted more of those costs to workers.

Since 2002, U.S. health premiums have shot up 97%, three times as fast as wages and inflation nationwide, the survey found.

"It doesn't feel moderate to the average worker when healthcare is going up and wages are flat or eroding in real terms," said Drew Altman, chief executive of the Kaiser Family Foundation. "There is every reason to believe premiums will go up as the economy improves, but we don't know when and by how much."

The survey found that 61% of U.S. firms offered health benefits to their workers, unchanged from last year. Insurance offered by employers is the primary source of health coverage for Americans, providing benefits to nearly 150 million people. The national survey included responses from 3,326 public and private firms with three or more workers.

Employers picked up most of these medical costs. The average worker paid $4,316, or 27%, toward the $15,745 family premium, the survey found. Coverage for only the employee cost $5,615 in 2012.

Overall, U.S. healthcare spending has been growing at historically low levels in recent years, which experts have attributed to people postponing doctor visits and other medical care to avoid out-of-pocket costs during the economic downturn. Now some insurers and hospitals are starting to report an increase in medical use after years of pent-up demand.

Experts say several cost-containment efforts included in the federal healthcare law are just beginning to be implemented across the country, so it's too soon to tell whether those will help rein in rising medical costs.

"This price moderation is short term," said David Lansky, chief executive of the Pacific Business Group on Health, a nonprofit coalition that represents major employers such as Walt Disney Co. and Boeing Co. "We haven't seen a sustainable or systemic fix yet."

Insurers have faced more scrutiny of proposed rate increases under the new healthcare law, and they have to issue rebates when they don't spend a minimum amount on medical care. Tuesday, federal officials estimated those measures have saved consumers $2.1 billion.

Looking ahead to 2013, employers surveyed last month reported a 7% premium increase, on average. That may not match what employers and workers ultimately face as many businesses raise deductibles or change benefits to lower their rates.

A spokesman for America's Health Insurance Plans, an industry trade group, said companies are "doing everything they can to keep coverage as affordable as possible for the millions of individuals, families and employers they serve."

Steve Todd, chief financial officer at Knox Attorney Services in San Diego, said that his company's premiums from Kaiser Permanente went up about 10% this year and that his insurance broker told him recently to expect a similar increase for 2013.

"Every year it gets tougher and tougher as a small company to make a profit and at the same time provide benefits to our employees," Todd said. "We are getting squeezed because the economy hasn't really recovered yet."

In response to those financial pressures, Todd said, the company offered a second, less generous health plan this year as a lower-cost option for its 200 workers.

Hollywood Sound Systems in Los Angeles received an 11% rate hike from Anthem Blue Cross last month. Shelley Harrison, the human resources manager there, said the eight-person firm has tried to mitigate the rate increases by boosting annual deductibles to $3,500 from $500 four years ago. "It's so difficult to take care of your employees and to be able to pay the bills," Harrison said.

Nationwide, 34% of covered workers have a deductible of at least $1,000 for single coverage, up from 10% in 2006, the survey said.

In other findings, more young adults secured coverage through their parents' insurance at work under a provision of the federal Affordable Care Act. About 2.9 million young adults up to age 26 are covered as dependents on employer plans, up from 2.3 million a year ago.