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Costs keep rising for employer-based health insurance

Health Care and Health Insurance
by Bonnie Albritton
Health insurance is one of the most  important employee benefits.
Health insurance is one of the most important employee benefits.

Americans are justifiably concerned about the cost of health care and insurance coverage, and increases in recent years have come despite the best intentions of lawmakers when passing the Patient Protection and Affordable Care Act almost a decade ago. While the topic of health-related costs continues to be a hot topic in Washington and on the campaign trail, many people still face ever-mounting increases for their basic coverage.

Indeed, the national average family health insurance premium for coverage obtained through an employer rose 5% from 2018 to 2019, to an annual price tag of nearly $20,600, according to the latest data from the Kaiser Family Foundation's Employer Health Benefits study. Of course, employees themselves didn't pay the full amount of those premiums, instead facing average costs of a little more than $6,000, with an additional $1,655 in average deductibles.

Digging into the numbers
As a consequence of these increases, KFF found that the average family premium has risen 22% over the last five years. Meanwhile, worker contributions grew at disparate paces. In the last five years, their share of premium costs rose 25% - faster than that of employers over the same period. But in the full decade prior (dating back to 2009), average premiums spiked 54%, compared with just a 37% increase in worker contributions.

Employer-provided insurance keeps growing in cost.Employer-provided insurance keeps growing in cost.

At the same time, coverage costs for single employees increased as well, albeit not at the same rates as those for families, the report showed. For instance, premium hikes over the past year only ticked up 4% (versus 5% for families). However, in both cases, these increases outpaced the rate of inflation - 2% - as well as wage growth - 3.4%.

Altogether, only about 57% of employers examined offered health insurance to their workers, dragged down by the roughly 56% of small businesses that did so; nearly all large employers (99%) provided coverage options, the study found.

Employers' future plans
As one might expect, the ever-changing landscape of health care and coverage has many companies on edge as they consider their future obligations, and executives are looking for any way they can to keep costs down. For slightly more than half of larger companies, there will be an increased focus on helping employees find solutions to their problems through virtual care (decision support, digital coaching, etc.), according to a recent survey from the National Business Group on Health. That put it well ahead of the second-most popular option - trying to bring down occurrences of high-cost claims - which was cited by fewer than 2 in 5 respondents.

Other common attempts to control costs, to be implemented by about a quarter of responding companies, were things like increased engagement with employees about their care options, pharmacy management and use of concierge services.

Interestingly, this all came as many more large employers said their approaches to health care were critical to their overall workforce strategies, rising to 36% of respondents from last year's 27%. About 93% of respondents also said they thought virtual care would have at least some impact on health care in the near future.

Rate changes trickling out
At this time of year, many companies have either already received clarification on health insurance rate increases for 2020, or are expecting them in the near future. Analysis from HealthInsurance.org indicates that, of the 17 states plus the District of Columbia that have already approved rate changes for next year, almost all are seeing relatively little change from 2019.

So far, the national weighted average for health insurance premiums in those states has risen by just $1 - from $594 per month to $595. Moreover, the site projects that, barring some unforeseen, trend-bucking changes in the states that haven't issued finalized rate increases, there could even be a slight drop at the national level.

Right now, residents from as many as 14 states plus Washington, D.C., could see premiums drop between 2% and 20% for next year, while 19 are likely to remain more or less flat in comparison with 2019. The remaining 18 are likely to see rate increases of between 2% and 12%, but only two states should see hikes in the double digits at all.

Of course, these are just averages and some employers or individuals may see their rates move in different directions than what is seen on a statewide basis, but nonetheless this could be good news for millions of Americans.

Class differences
Meanwhile, the latest data from the U.S. Census Bureau shows slightly more than 55% of Americans received their health insurance through an employer in 2018, the latest year for which complete statistics are available. This was by far the most common avenue by which consumers obtained coverage, well ahead of the roughly 17.9% who are on Medicaid, and 17.8% on Medicare.

While the uninsured rate in the U.S. rose slowly but steadily in 2017 and 2018 (the latter coming in at around 1 in every 11 people), these numbers are well down from the averages seen before the implementation of the state- and federally-run marketplaces. The recent high for uninsurance, set in 2010 - the same year the ACA became law - was close to 16%.

Nonetheless, employers and insurers need to do more to make sure Americans have as many affordable coverage options that work for them as possible.



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