Who's taking biggest hit on workplace coverage?

I'm hearing a growing sense of frustration from people who pay a lot for workplace health insurance,  and a new study from The Commonwealth Fund confirms there's good reason.

The state-by-state analysis of employer coverage shows that residents of the Carolinas pay a steadily-growing portion of their income for premiums and deductibles. And in the South,  where median wages are lower,  those rising costs take a bigger bite,  the study concludes.  (Read the report here and check interactive state maps here.)

Especially hard hit are North Carolina employees with family coverage.  While costs for employee-only coverage here are in line with national averages,  family coverage costs more in North Carolina.  And premiums for family coverage are growing at just over 10 percent a year during the past three years,  compared with 5.9 percent nationwide and 7.2 percent in South Carolina.

Folks I talk to often blame Obamacare.  They're paying taxes to subsidize premiums and deductibles for people who don't have workplace coverage.  But employees who are eligible for coverage that meets the standards of the Affordable Care Act can't tap into those subsidies themselves,  even though they may be paying sums that seem far from affordable.

Researchers from The Commonwealth Fund conclude that the relationship between rising worker costs and the ACA is complex  (the fund is a private foundation that "underwrote a considerable part of the research" underlying the act).  Some aspects of the act,  such as allowing young adults to stay on parents' plans until age 26 and requiring full coverage of preventive care,  could drive up costs,  the report says.  But overall premiums were growing much faster in the years before the ACA kicked in than in years since,  the report notes,  indicating that such costs  "have been easily absorbed in insurance markets."

In fact,  the study indicates that North Carolina employers have seen a more dramatic slowdown in premium growth than counterparts across the country.  For instance,  N.C. premiums for workplace plans were growing at 5.6 percent a year from 2003 to 2010,  compared with 5.1 percent nationally.  But from 2010 to 2013,  N.C. premiums have risen by only 1.6 percent a year,  compared with 4.1 percent nationally.

So why doesn't this ring true to workers?  Because,  as I and many others have noted before,  employers are passing along a bigger share of the costs,  forcing their staff to cover a bigger share of premiums and/or higher out-of-pocket costs.  For instance, that 1.6 percent annual growth in the overall cost of a single-person workplace policy in North Carolina translated to a 4.7 percent annual increase in the employee's share.  And while the overall cost of a family policy in North Carolina has grown only 3.3 percent a year since 2010, the employee's share has risen by 10.3 percent a year.

"The key question is how to slow health care cost growth in a way that benefits middle class and lower-wage working families  --  that is,  keeping premium growth in check without eroding benefits,"  the Commonwealth study concludes.  "This will likely require concerted efforts that span the private and public sectors.  The challenge to policy leaders will be to pursue reforms that improve the quality of health care,  rein in cost growth,  and ensure that savings are shared with patients and families across the income spectrum."

Employers: Obamacare isn't biggest problem

The Affordable Care Act may be pushing up the cost of your workplace benefits, but it's not at the top of employers' list of challenges,  according to an August report by the National Business Group on Health.

Like many of you,  I've heard my employers talk about how Obamacare is shaping our health insurance benefits.  For instance, McClatchy is among many companies trying to bring down costs now to avoid the 40 percent excise tax on "Cadillac plans" that will be levied in 2018.

But when the nonprofit group representing large employers asked representatives of 136 companies to name the top three factors driving costs up,  the ACA didn't make the top five.

High-cost claimants  (individuals with expensive medical conditions)  topped the list, with 40 percent putting it at No. 1 and 62 percent putting it in the top three.

Specific diseases or conditions were named by 63 percent,  with 24 percent citing that as the top cause.

$1,000 per pill

Specialty drugs were named by 58 percent, though only 6 percent called that the top factor.  Brian Marcotte,  CEO of NBGH,  said that refers to extremely costly drugs,  such as a new hepatitis C medication that costs $84,000 for an 84-tablet course of treatment.

Overall medical inflation was cited by 35 percent,  with 12 percent putting it in the top spot.

Hospitalization was named by 26 percent,  with 7 percent putting it first.

Complying with the ACA was cited by 19 percent, with 7 percent saying it's the biggest factor in driving up costs.

I mentioned that to Steve Graybill,  a partner with Mercer's human resources consulting business in Charlotte.  He said he'd attribute  "better than half"  of next year's rising costs to the ACA,  though he agreed those expenses are entwined with all the other factors that have been driving up costs for years.

Workplace insurance: Bad news and good

If Walmart turns out to be a trendsetter,  the Affordable Care Act may be driving up the number of people who have workplace insurance,  New York Times writer Margot Sanger-Katz reports.

"In an earnings call last week, Walmart announced that its workers were signing up for health insurance en masse,"  Sanger-Katz posted yesterday on The Upshot.  "The news was bad for the company’s shareholders, since the added $500 million it will cost to cover them will eat into expected profits. But it also means that many more low-income families have health insurance now than did last year."

Sanger-Katz

Walmart hasn't changed its insurance,  which already comes with low premiums,  she reports.  Instead,  workers may be reacting to the threat of a tax penalty for being uninsured.  It's a trend that showed up when Massachusetts launched a similar program in 2006.

"This increase,  if it is permanent,  is going to cost employers money,"  Sanger-Katz writes.  "But it illustrates how the Affordable Care Act is set up to build on the country’s existing insurance system rather than tear it down.  The law doesn’t just create new public insurance programs.  It also includes incentives designed to get more people enrolled in employer health coverage."

Meanwhile,  the National Business Group on Health reports that employers expect the ACA and rising health-care costs to drive insurance costs up by 6.5 percent in 2015.  The survey of 136 employers showed many plan to shift some of those costs to employees.  Expect to see more cost-sharing and reliance on "consumer-directed health plans,"  or health care savings accounts.  The NBGH report echoes what speakers told the audience at the Charlotte Chamber's health care summit last week.