American workers are feeling the brunt of higher premiums and out-of-pocket costs from their employer health plans, according to a new report released Wednesday.
In the first year that the health care law’s regulations and coverage are active, 86 percent of workers expect their personal medical costs to increase, according to the annual Aflac WorkForces Report, which has studied the landscape of employer-provided health coverage since Obamacare was passed in 2010.
That’s in line with employers’ projections as well. In 2013, 56 percent of companies increased their employees’ share of health care premiums or co-pays; another 59 percent plan to do the same by the end of 2014.
Employers and insurance companies have both markedly shifted towards a new model where consumers pay higher out-of-pocket costs every time they actually use health services — in addition to rising premiums.
A vast majority of workers still feel insecure about medical costs, however: The report found that the average American worker is just one serious medical event away from financial hardship.
Sixty-six percent fear that they wouldn’t be able to handle the large costs of a serious illness or injury. When it comes to paying unexpected out-of-pocket medical costs, 49 percent of workers have less than $1,000 on hand; 27 percent of employees have less than $500.
Employees’ consistent worries about handling health-care costs were supposed to be alleviated by the health-care law, but even insured employees remain largely unprepared to deal with typical out-of-pocket costs.
The threat of bankruptcy due to unexpected medical costs was a key talking point for the Affordable Care Act’s supporters. Obamacare limits insurers’ ability to cap annual and lifetime payments for essential health benefits, but with many workers unable to pay over $1,000 out-of-pocket, financial hardships will arise for more routine health services.
While workers continue to struggle with health-care costs, employers are scrambling to lower their own ballooning health-care costs, naming it their top business concern. In 2013, 21 percent of companies surveyed converted full-time workers to part time, avoiding health-insurance costs; and 22 percent eliminated or reduced offered employee benefits.
Even on top of rising premiums, the cost outlook for employer-provided health insurance, which cover approximately 157 million Americans, remains bleak. Already, a long list of taxes will be passed from insurers to employers to workers, and more are due to hit in the next several years.
The employer mandate to provide health insurance will hit all companies that don’t provide health plans in 2016; and in 2018, the “Cadillac tax,” a 40 percent excise tax on high-cost health plans, will hit employers as well.