Workers relying on employer-sponsored health-insurance plans experienced an average 3 percent increase in premium costs during 2017, according to a national study released last week.
That growth rate continued what the Kaiser Family Foundation calls a “six-year run of relatively modest increases” for the 151 million Americans who receive employer-sponsored insurance coverage.
The average household premium cost is $18,764 for 2017.
A second national study released last week by Mercer, a benefit services company, found that employers project a 4.3 percent premium increase for 2018 after they make planned changes, such as raising deductibles or switching carriers.
Mercer said that increase would be the largest national annual increase since 2011. Mercer expects to have its North Carolina specific report out by early November.
Health-care economists caution that in the current era of health-insurance uncertainty, past performance does not guarantee similar low single-digit increases going forward.
For example, the proposed U.S. Senate Graham-Cassidy repeal initiative for the federa’ Affordable Care Act would allow employers with more than 50 workers to quit providing sponsored insurance without facing a federal tax penalty.
The individual insurance mandate also would go away, while states could request waivers to projected Medicaid block grants that would allow them to drop covering certain essential benefits, such as maternity care and prescription drugs.
“As policymakers and providers continue to work to improve health care, ensuring it remains affordable and accessible is critically important,” said Dr. Jay Bhatt, the chief medical officer for the American Hospital Association.
Politico reported that individuals and families would be eligible to contribute more to their pretax Health Savings Accounts than the current respective $3,400 and $6,750 amounts. The accounts would be adjusted to allow their use for paying insurance premiums.
“Analysts are still trying to digest all of the provisions and implications of the latest repeal-and-replace bill,” said John Dinan, a political-science professor at Wake Forest University, said, referring to the Graham-Cassidy plan. “There are a number of questions still to be answered about the effects of the bill.
“The individual mandate has been credited with bringing into the insurance market a number of younger persons and other persons who are less costly to insurers, and thereby helping insurers defray the costs of covering other less-healthy persons pursuant to other ACA requirements,” Dinan said.
“The elimination of the individual mandate is the part of the Graham-Cassidy bill that is likely to be of most pressing interest — and presumably concern — to insurers,” he said.
Another analyst said he doesn’t believe the Graham-Cassidy bill would have much effect on larger employers since the ACA didn’t in terms of providing health insurance.
“Repealing or replacing the ACA will similarly not affect larger employers all that much,” said Mark Hall, a professor of law and public health at Wake Forest University and a national expert on health-care policies.
“The main difference would be that repealing/replacing the ACA would give small employers more flexibility over what benefits they cover. However, states could still regulate those benefits, which they did quite a lot prior to the ACA,” Hall said.
“The ACA’s mandated benefits were specifically set according to the benefits that were most common in the small employer market,” he said. “Therefore, repealing the ACA’s benefit mandates is also not likely to have a huge effect on small employers.”
Employer market stable
Kaiser’s 2017 Employer Health Benefits survey of 2,100 employers showed health-premium rate increases in 2017 were similar in level to worker wages (up 2.3 percent) and inflation (2 percent).
By comparison, premium increases will be much larger on the ACA’s federal health exchange in 2018.
Blue Cross and Blue Shield of North Carolina is requesting a 14.1 percent increase in premiums for individual ACA insurance plans for 2018 on top of a 24 percent increase in 2017. Blue Cross is offering 18 plans in 2018.
“While the marketplaces seem to get all the attention, the much larger employer market where more than 151 million people get their coverage is very stable,” said Drew Altman, the Kaiser foundation’s president and chief executive.
Blue Cross has affirmed plans to cover all 100 North Carolina counties in the exchange. North Carolina had the nation’s fourth highest exchange-enrollment rate for 2017 at 549,158, according to the U.S. Department of Health and Human Services.
Blue Cross had 502,000 customers in 2017. It hasn’t provided a 2018 projection.
Kaiser said household health-insurance premiums costs are up 19 percent since 2012. The rose 30 percent from 2007 to 2012 and 51 percent from 2002 to 2007.
However, workers’ average contributions to household premiums have increased more rapidly than the employer’s share since 2012 at 32 percent to 14 percent.
Kaiser determined that workers on average contribute $5,714 annually toward their family premiums. People who work for employers with fewer than 200 employees paid $6,814 on average.
The survey found that the average annual deductible for single coverage for all workers who face one was $1,505 in 2017. However, the amount was 66 percent higher for workers at small firms ($2,120) than large firms ($1,276).
Only half of employers with 50 or fewer workers provided sponsored health plans in 2017, down from 59 percent in 2012. Companies that dropped health plans said their main reasons were high costs or they were too small to offer it. A total of 16 percent said they provided funds to employees to help pay for coverage on the health exchanges.
“Small firms are much less likely to offer health benefits to their workers, and when they do, workers may find it quite costly to enroll their families,” said Gary Claxton, the study’s lead author and the director of Kaiser’s Health Care Marketplace Project.
Larger companies are more willing to provide separate dental and vision plans to employees, while long-term-care insurance was offered by just 25 percent of them. Nearly half of large companies offer premium-discount incentives to employees in exchange for them participating in wellness and/or health-screening programs.
Among companies offering health benefits, 16 percent of small businesses and 14 percent of large businesses require higher premium contributions or cost sharing from workers who use tobacco.
Mercer found in its survey that 46 percent of employers said they would take steps to reduce cost growth in 2018, such as relying more on offering lower-cost, high-deductible health plans.
“Employers find the challenge of juggling cost-management objectives and affordability issues for employees gets harder every year,” said Tracy Watts, a senior partner and Mercer’s leader for health reform. “Consumerism has a role in addressing rising costs, but there are many factors that drive costs, separate and distinct from relative generosity of the plan design.”
For example, Mercer said employers have to adjust their plans to account for the introduction of new medications used to treat complex conditions, such as cancer, multiple sclerosis and hepatitis C.
Respondents to Mercer’s survey reported that spending on these specialty drugs rose by about 15 percent at their last renewal, pushing up growth in the overall cost of prescription drugs to more than 7 percent.
“With so many new specialty drugs in the pipeline and few well-known brand-name drugs going off-patent in the near future, the spiraling drug cost problem will certainly get worse before it gets better,” Watts said.