Mpls. Workers Cover More Than Avg. Of Health Care Costs
This year, Minneapolis appears to have averted the overall increase in health care premiums that hit most of the nation, but employees here foot a bigger portion of their health care costs than those in most cities.
And in 2014, the city can expect a 6.6 percent hike in premium costs, which is in line with national trends.
According to Lincolnshire, Illinois-based Aon Hewitt, a human resources consulting firm and a subsidiary of Aon Corporation, U.S. companies and their employees saw the lowest health care premium rate increases in more than a decade this year—and Minneapolis actually saw a slight decrease.
Aon’s analysis found that after plan design changes and vendor negotiations, the average premium rate increases for large employers in 2013 was 3.3 percent, down from 4.9 percent in 2012 and 8.5 percent in 2011. In the upcoming year, however, the firm expects premium increases to move back to the 6 to 7 percent range.
Minneapolis fared particularly well in 2013. Its health care plan costs actually decreased by 0.1 percent, compared to an increase of 3.2 percent in 2012. However, according to Aon, Minneapolis workers should expect costs to increase to 6.6 percent, about the same as the national average of 6.7 percent, in 2014.
“There are many factors that contributed to the lower rate of premium increases we saw over the past two years that we don't expect to continue in the long-term,” Tim Nimmer, chief health care actuary at Aon Hewitt, said in a statement. “These include the lagged effect from the economic recession on health care spending and continued adjustments as employers and insurers phase out the conservatism that was reflected in earlier premiums due to uncertainty around economic conditions and health care reform.”
“Additionally, employers and insurers will now be subject to new transitional reinsurance fees and health insurance industry fees,” Nimmer added.
In terms of dollars, the average health care plan cost per employee for major companies in Minneapolis fell from $9,689 in 2012 to $9,674 in 2013. However, that number is expected to jump to $10,313 per employee in 2014.
The Twin Cities is still expected to be ahead of the national average, though. For 2014, average health care costs throughout the country are projected to increase to $11,176 per employee.
Employees throughout the United States will be asked to contribute on average about 22.4 percent of the total health care premium, which equates to $2,499, in 2014. Employees will also have to pay more out-of-pocket costs—which includes co-payments and coinsurance, according to the report. The projected national average for out-of-pocket costs is $2,470 for 2014.
Those projections mean that over the last decade, employees’ share of health care costs—including employee contributions and out-of-pocket costs—will have increased almost 150 percent from $2,011 in 2004 to $4,969 in 2014.
And that is where Minnesotans are really coughing up the money. Total health care costs for Minneapolis employees—including $2,529 in employee contributions and $2,949 in out-of-pocket costs—are projected to be $5,478 in 2014, up from $5,012 in 2013, and 10 percent higher than the national average.