Total health-benefit cost growth for employer-based insurance has slowed to a near-record low in recent years, but it's employees who are feeling the pinch.
The total cost of health benefits per employee enrolled in employer-sponsored health plans grew 2.4% to $11,920 on average in 2016, compared with 3.8% in 2015, according to data released Wednesday by employee benefit consultant firm Mercer. Employer benefit costs are expected to rise 4.1% in 2017.
But the slower cost growth in employer coverage comes at the cost of shifting more workers to high deductible plans that are attached to a health savings account or a health reimbursement arrangement. Enrollment in HDHPs, defined as plans with a deductible of $1,300 for individual coverage and $2,600 for family coverage, jumped to 29% of all covered workers surveyed, up from a quarter of employees last year, Mercer's annual National Survey of Employer-Sponsored Health Plans showed. The survey included 2,544 employers and was conducted over the summer.
Meanwhile, premiums for benchmark exchange plans will soar 25% on average in 2017. Most enrollees won't see their own premiums jump quite that high, though, thanks to exchange subsidies. The latest HHS report released this week shows the average benchmark plan premium in 2017 will be $302, compared with $242 in 2016.
Many employers have been pushing their worker into high deductible plans as a way to avoid triggering the health care law's 40% “Cadillac” tax on the portion of employer-based health premiums that exceed a certain threshold. That tax is set to go into effect in 2020. Of the 80% of employers with more than 20,000 employees offering a high deductible plan this year, enrollment in those plans jumped to 40% of employees from 29%.
Mercer found that coverage in a high deductible plan attached to a health savings account cost an average 22% less than a PPO plan. Still, studies have shown that people enrolled in those plans are more likely to put off necessary medical care, which could lead to worse and more costly medical conditions down the road.
“For employees who can manage the high deductible, a (consumer-directed high deductible health plan) can be a financially smart move,” Tracy Watts, Mercer's leader for health care reform, said in a statement. “Employers are trying to make it easier to choose a CDHP by offering resources to help employees manage their spending on healthcare. But the fact that most employers still offer a CDHP as an option alongside other choices shows they understand it may not be the right plan for everyone.”
Lofty deductibles aren't reserved for employer plans, however—about 43% of people who enrolled in federal exchange coverage in 2016 have an average deductible of at least $2,500, according to HHS data published in July.
According to Mercer, employers are helping to offset the cost of high deductibles by seeding HSA accounts and offering less-expensive alternatives for care, such as telemedicine. Many are also offering transparency shopping tools and wearable devices to keep employees engaged in their health.
At the same time, more employers are adding premium surcharges for employees who smoke and requiring a surcharge for spouses.