Workers saw modest increases in traditional cost sharing for health care services, including deductibles and copayments. The survey also finds for the first time that many large employers impose a separate and substantial deductible or copay for inpatient hospital services. Research has demonstrated that higher copays and deductibles save costs, but may also discourage use of needed services, particularly among lower-income individuals. ¹¹

Non-preferred provider (out-of-network) deductibles in PPOs jumped considerably this year. The percentage of HMO enrollees facing $15 copays for physician visits also rose considerably.

• Workers face many different forms of cost sharing. More than three quarters of workers contribute to their monthly health insurance premium similar percentages face sharing such as annual deductibles and copayments for prescription drugs and office visits (Exhibit 7.1).

• In 2003, deductibles increased for non-preferred providers PPO plans and preferred providers in POS plans, workers with single coverage, deductibles for PPO non-preferred providers, grew from $466 to $561 (Exhibit Deductibles for single coverage in POS plans increased – from $54 to this year (Exhibit 7.2).
  
• • Deductibles are generally lower for workers in large firms (200 or more workers) than for workers in small firms (3-199 workers), across all types of plans. For PPO preferred providers, the average worker in a small firm with single coverage must pay a deductible of $419, compared to $209 for workers in large firms (200 or more workers) (Exhibit 7.3).
  • Covered workers in firms with some union employees face an average PPO preferred provider deductible of $181 for single coverage, compared with $330 for workers in firms with no union workers.

• The vast majority of covered workers in HMOs face a fixeddollar copayment rather than a percentage coinsurance when they visit a physician. Those in PPO and POS plans also are likely to face copayments rather than coinsurance when using preferred health care providers. In contrast, workers in conventional plans are most likely to pay coinsurance (57%) (Exhibit 7.9).
  
• • For HMO coverage, a $10 copayment is no longer the most common copayment amount for physician visits. Thirty-five percent of covered workers in HMOs now face a copayment of $15, while 12% face a copayment of $20. The percentage of workers with a copay of $5 is 4%, while those with a $10 copayment fell substantially, from 51% last year to 35% in 2003. (Exhibit 7.6).

[11] Newhouse, Joseph, et. al., “Free for All, Lessons from the RAND Health Insurance Experiment,” Harvard University Press, Cambridge, Massachusetts, 1993.