Will health coverage cost trends blunt the rebound in physician office visits?

Insurance cost growth was historically low in 2012, but the pace might accelerate in 2013. Payment responsibility might affect the decision to see a doctor.

By Victoria Stagg Elliott — Posted Sept. 24, 2012

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Health insurance premiums grew more moderately in 2012, because in 2011 people didn’t go to the doctor as much.

In 2012, however, patients returned, and this may lead to higher premiums in 2013 and put a damper on traffic to physician offices.

“This might be a more complicated story than it seems,” said Douglas Hough, PhD, associate professor at the Johns Hopkins Carey Business School in Baltimore, who works on health economics issues. “If someone has to pay 10% more for the premiums, but the price of the co-pay and co-insurance are about the same, there should be no effect on utilization. On the other hand, if people switch to a lower premium policy with a high deductible, that definitely would reduce utilization, but the situation is probably more complex than that.”

Premiums for a family of four went up an average of 4% in 2012 for those with employer-sponsored coverage. The single coverage rate increased 3%, according to the “Employer Health Benefits 2012 Annual Survey” released Sept. 11 by the Kaiser Family Foundation and the Health Research & Educational Trust. The report includes data on 2,121 companies with three staffers or more. In 2011, family premiums went up 9%, and single ones increased 8%.

Researchers say the smaller increase in 2012 were most likely in part because patients deferred or delayed care in 2011, a result of the struggling economy and patients’ premiums and deductibles growing. This put more financial pressure on patients regarding their health. Insurers use the prior year’s use patterns to set the current year’s rates.

“In terms of employee insurance costs, this year’s 4% increase qualified as a good year,” said Drew Altman, PhD, Kaiser’s president and CEO.

But patients came back in 2012. The volume of physician visits increased 4.8% in the second quarter of 2012, ending a two-year period of mostly declining numbers, according to a June 23 research note from Charles Boorady, then an investment analyst for Credit Suisse and now a managing partner of TT Capital Partners, a private equity firm based in New York. Several large, publicly traded insurance companies also reported increased utilization in recent earnings statements.

This may, however, lead to greater premium increases, which could turn back the trends in office visits. Another Kaiser survey in August found that the average premium increase expected by employers for 2013 was 7%.

“We have these clashing trends that are circling each other,” said Cyril F. Chang, PhD, director of the Methodist Le Bonheur Center for Healthcare Economics at the University of Memphis in Tennessee.

The medical-loss ratio, a provision of the Affordable Care Act requiring insurers to spend 80% to 85% of premiums on care costs, depending on the plan, is not expected to play a significant role in lowering the average growth in premiums for coverage through an employer. Sixty percent of workers at companies in the Kaiser survey are in self-funded plans, and the medical-loss ratio does not apply.

Economists say the fact that consumers are paying more for insurance and medical care should be taken into account when attempting to predict trends in the physician office visits. Researchers believe this may make some people hesitate before taking the chance of incurring more bills for a doctor’s appointment. The Kaiser report found that worker earnings grew 47% from 1999 to 2012, but premiums went up 172%. The employee contribution to premiums grew 180%. In 2012, the premium contribution of those with coverage for a family of four working at a company of three to 199 staffers was $5,134, but only $1,831 in 1999. Those at companies with 200 or more employees paid $3,926, but only $1,398 in 1999.

More people also were on plans with a deductible of $1,000 or more with single coverage or a combination of a high-deductible plan with a health savings account. Among companies that provide health benefits to employees, the proportion offering high-deductible plans with health savings accounts went up from 4% in 2005 to 31% in 2012. The percentage of covered workers with an annual deductible of more than $1,000 for single coverage went up from 10% in 2006 to 34% in 2012. Various surveys have shown that more employers are interested in offering high-deductible health plans.

Recent increases in the number of people with insurance may have little impact on physician office traffic. The Kaiser survey found that 61% of companies offered health benefits in 2012, an increase from 60% in 2011. The U.S. Census Bureau reported Sept. 12 that the number of people without health insurance went down from 50 million in 2010 to 48.6 million in 2011. The bulk of the newly insured are 19 to 26 years old, able to stay on their parents’ insurance because of an ACA provision.

“They are not big utilizers,” Hough said. “This group will not affect office volume much.”

The uncertainty of 2013 might extend into 2014, some analysts said. Under the ACA, people would be required to have insurance or pay a federal penalty in 2014. This should lead to more than 30 million newly insured, presuming the results of the upcoming presidential election don’t portend changes in the law.

“A lot is riding on the election, but, from 2014 and beyond, I think the demand for physician services will be up,” Chang said. “On the other hand, there will be higher premiums and managed care and value-based purchasing, which could restrain demand for health care services.”

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Increasing burden to pay more for care

The number of people with insurance is inching up, but the fact that patients must pay more for premiums and deductibles may make them pause before rushing back to their doctor’s office, health economists say. This could put a damper on the renewed growth in patient visits. The Kaiser Family Foundation and the Health Research & Educational Trust surveyed 2,121 companies with at least three workers. The report defined a family as two adults and two children. The percentage increases are cumulative from the base year of 1999.

Year Change in
overall inflation
Increase in
workers’ earnings
Increase in
family worker
Increase in
family premium
1999 (base year) 0% 0% 0% 0%
2000 3% 4% 5% 11%
2001 7% 8% 16% 22%
2002 8% 11% 38% 38%
2003 11% 14% 56% 57%
2004 13% 17% 72% 72%
2005 17% 20% 76% 88%
2006 21% 24% 93% 98%
2007 24% 29% 113% 109%
2008 29% 34% 117% 119%
2009 28% 38% 128% 131%
2010 31% 42% 159% 138%
2011 35% 45% 168% 160%
2012 38% 47% 180% 172%

Source: “Employer Health Benefits 2012 Annual Survey,” Kaiser Family Foundation and the Health Research & Educational Trust, Sept. 11 (link)

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More workers have higher deductibles

A greater proportion of companies are offering insurance with high deductibles, and more employees are signing up for those plans, according to a survey by the Kaiser Family Foundation and the Health Research & Educational Trust. The percentage of workers on a plan with a deductible of more than $1,000 went from 10% in 2006 to 34% in 2012.

Workers with a deductible
more than $1,000
2006 10%
2007 12%
2008 18%
2009 22%
2010 27%
2011 31%
2012 34%

Source: “Employer Health Benefits 2012 Annual Survey,” Kaiser Family Foundation and the Health Research & Educational Trust, Sept. 11 (link)

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External links

“Employer Health Benefits 2012 Annual Survey,” Kaiser Family Foundation and the Health Research & Educational Trust, Sept. 11 (link)

“Income, Poverty, and Health Insurance Coverage in the United States: 2011,” U.S. Census, Sept. 12 (link)

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