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Workers Shoulder Bigger Portion of Health Care Costs, Study Finds

The runaway train of rising health-care costs has slowed, but you're forgiven if you haven't noticed: New research shows that employees are contributing a record amount toward their coverage, a trend that experts say is likely to continue as high-deductible plans and stingier benefits become more commonplace.

New data from consulting firm Aon Hewitt show that health care costs for mid-sized and large companies costs rose 3.2 percent in 2015, the smallest increase since 1996. The amount employees have to pay in premiums and out-of-pocket costs, though, hit a record of nearly $4,700 — and that figure will rise by another $370 next year, it forecast.

Other studies have drawn similar conclusions. "We anticipate that the rate of increase will pick up again. Our study data shows that cost increases over the past couple of years have been somewhat suppressed," said Les McPhearson, CEO of United Benefits Advisors, which found in its own annual study a 2.4 percent rate of increase this year over 2014.

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"We anticipate that employers are going to continue to share health care cost increases with their employees," McPhearson said. "It will continue to be a significant expense burden on employees."

Mike Morrow, senior vice president of Aon Health, said the cost balance has been shifting toward the employee for several years now.

"Every year, it ratchets up a bit higher, and there really has been a shift," he said. "Employees' share of the premium and out-of-pocket costs increase as plan designs get a little leaner every year."

Higher prices for prescription drugs are one culprit behind employees' greater out-of-pocket expenses. Morrow said drug prices are climbing at a double-digit pace. And while insurers are pushing patients toward generics in an effort to control costs, those prices are going up, too, he said.

"Generics are starting to increase in price as well," agreed Bruce Elliott, manager of compensation and benefits at the Society for Human Resource Management. "We're starting to see consolidation, we're starting to see private equity firms enter this market, as well," both of which contribute to rising drug prices, he said.

The slower increase in health care costs overall provides a bit of a buffer, but experts say this isn't likely to last. Aon Hewitt's prediction calls for a 4.1 percent increase in overall health care costs next year.

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"Yes it's lower than it's been in a long time, but… it's really not clear whether this is going to be a long term trend," said Sam Richardson, a health economist at Boston College. "There are lots of reasons think that this could be just a short-lived slowdown and we could see costs accelerating again in the next few years."

There are a few reasons cost increases have moderated over the last few years, but they're not good ones: Richardson pointed out that there hasn't been as much medical innovation in recent years, with big potential game-changers like biological and personalized medicine still in their infancy.

Morrow added that the tepid wage growth that has characterized the economic recovery and has trailed the rate of health care cost increases has put a drag on how much workers actually use their insurance. Providers don't have to hike premiums as much because people are putting off visiting the doctor or filling prescriptions.

A National Bureau of Economic Research working paper issued last month studied one company's transition from a generous plan that provided health care for free to a high-deductible plan. It found that health care spending fell by up to 14 percent, a drop entirely attributed to employees' higher cost burden.

Those high-deductible plans are another reason health care cost increases have slowed. They're cheaper for companies to subsidize, and a growing number of mid-sized and large firms — 16 percent, according to Aon Hewitt — now offer this as the only health care option for workers.

It's not clear that they're better for patients, though. "We still don't really have a lot of experience with consumer-driven health plans," Elliott said, using another term for high-deductible plans. "It's only been the last five years we've really started to see a shift toward (them)."

"While (high-deductible plans) are effective at reducing costs, more work has to be done to see what type of care is being reduced in order to achieve these cost savings," Matthew Eisenberg, assistant professor of health policy and management at Johns Hopkins University, said via email. "Indiscriminately reducing care regardless of value would be bad."