We"ve All Heard About the Millions of Uninsured Americans, What About the "Underinsured"?
According to a study published June 2 on the website of Health Affairs, the 161 million Americans with employer-sponsored health benefits are facing a major increase in out-of-pocket expenses.
The study was financed by The Commonwealth Fund and authored by researchers from both the National Opinion Research Center (NORC) and Watson Wyatt Worldwide.
Researchers used medical claims data on 10 million individuals with employer-provided health plans to simulate both health plan and out-of-pocket spending between 2004 and 2007.
They then used the data to calculate what plan members would spend for the same services under each of the different types of health plans employers in the U.
S.
commonly offer.
Key findings from the study include the following: Out-of-pocket expenses are going up: Out-of-pocket expenses (this includes premium shares, deductibles, copayments, and coinsurance) for those surveyed increased 34% between 2004 and 2007.
For the most costly one percent of employees surveyed, these expenses went up 42 percent.
Fifty-seven percent of increases in employee out-of-pocket expenses were attributed to higher cost sharing for medical services while only 43 percent were due to higher premium contributions.
In 2007, the average employee on an employer-sponsored plan faced $729 dollars in out-of-pocket expenses for medical services.
Percentages of "underinsured" Americans are going up: Authors of the study considered individuals to be "underinsured" if their out-of-pocket medical expenses (excluding insurance premiums) were expected to exceed 5-10% of their incomes.
With the threshold for underinsurance set at 5% of income spent in out-of-pocket medical expenses, 20.
3% of Americans on employer-sponsored insurance with annual incomes at 200 percent of the Federal poverty level were underinsured in 2007 (up from 16.
5% in 2004).
If the threshold were set at 10% of income, 8.
7% of those with incomes at 200 percent of the Federal poverty level would be underinsured.
Keep in mind that the percentages above represent just out-of-pocket healthcare expenses, not healthcare expenses as a whole.
Once the rising employee premium contributions, deductibles, co-insurance and co-payments are all factored in, you'll see that your employees are spending far more than 5-10% of their incomes to fulfill their healthcare needs.
Possible Solutions for high out-of-pocket expenses: Several new options for reducing benefit costs and driving down employee out-of-pocket expenses have emerged in the marketplace.
These options include voluntary benefits, tax saving instruments such as HSAs, HRAs and FSAs as well as partially self funded plans.
These options help many employers maximize the value of their benefits at little to no cost to them.
In light of the increasing employee out-of-pocket costs, has anyone taken the time to explore these and or other options with you?
The study was financed by The Commonwealth Fund and authored by researchers from both the National Opinion Research Center (NORC) and Watson Wyatt Worldwide.
Researchers used medical claims data on 10 million individuals with employer-provided health plans to simulate both health plan and out-of-pocket spending between 2004 and 2007.
They then used the data to calculate what plan members would spend for the same services under each of the different types of health plans employers in the U.
S.
commonly offer.
Key findings from the study include the following: Out-of-pocket expenses are going up: Out-of-pocket expenses (this includes premium shares, deductibles, copayments, and coinsurance) for those surveyed increased 34% between 2004 and 2007.
For the most costly one percent of employees surveyed, these expenses went up 42 percent.
Fifty-seven percent of increases in employee out-of-pocket expenses were attributed to higher cost sharing for medical services while only 43 percent were due to higher premium contributions.
In 2007, the average employee on an employer-sponsored plan faced $729 dollars in out-of-pocket expenses for medical services.
Percentages of "underinsured" Americans are going up: Authors of the study considered individuals to be "underinsured" if their out-of-pocket medical expenses (excluding insurance premiums) were expected to exceed 5-10% of their incomes.
With the threshold for underinsurance set at 5% of income spent in out-of-pocket medical expenses, 20.
3% of Americans on employer-sponsored insurance with annual incomes at 200 percent of the Federal poverty level were underinsured in 2007 (up from 16.
5% in 2004).
If the threshold were set at 10% of income, 8.
7% of those with incomes at 200 percent of the Federal poverty level would be underinsured.
Keep in mind that the percentages above represent just out-of-pocket healthcare expenses, not healthcare expenses as a whole.
Once the rising employee premium contributions, deductibles, co-insurance and co-payments are all factored in, you'll see that your employees are spending far more than 5-10% of their incomes to fulfill their healthcare needs.
Possible Solutions for high out-of-pocket expenses: Several new options for reducing benefit costs and driving down employee out-of-pocket expenses have emerged in the marketplace.
These options include voluntary benefits, tax saving instruments such as HSAs, HRAs and FSAs as well as partially self funded plans.
These options help many employers maximize the value of their benefits at little to no cost to them.
In light of the increasing employee out-of-pocket costs, has anyone taken the time to explore these and or other options with you?
