Workers shoulder a growing share of healthcare costs
The cost of health coverage for people who obtain insurance through their employers rose modestly this year, continuing a yearslong stretch of relatively low premium increases for job-based coverage.
The average annual premium for family coverage rose 5% to $19,616 in 2018 over the year before, with employees picking up $5,547 of that, or 28%, according to the Kaiser Family Foundation's survey of 2,160 employers released Tuesday. The uptick in the average premium is higher than the 3% premium increase recorded last year, but still well below the double-digit cost growth employers experienced in the early 2000s. For individual coverage, average premiums rose 3% to $6,896.
The ongoing stability of the employer market where 152 million people get their coverage is welcome news for companies, considering the volatility and high premiums that have characterized the individual insurance market where roughly 20 million people buy coverage.
But there's a trade-off: Employers have continued to shift a larger share of the cost of coverage to their workers by requiring them to pay more for healthcare out of pocket. Not only has the number of workers who face an annual deductible grown, but the average deductible has creeped higher and higher for more than a decade.
"Rising healthcare costs absolutely remain a burden for employers, but they're a bigger problem for workers as their cost-sharing has been rising really much faster than their wages have been rising in recent years," Drew Altman, president and CEO of the Kaiser Family Foundation, said Wednesday.
The average deductible among workers who face one before the health plan begins to pay for services reached $1,573 this year, up 4.5% from 2017. Among workers enrolled in a high-deductible health plan, the average deductible reached $2,349 before any employer contributions to a savings account.
The percentage of workers with a deductible rose to 85% this year, up from 81% in 2017 and 59% 10 years ago.
Employers and benefit consultants say high deductibles prompt workers to think twice about the cost of healthcare services and to shop around for lower-cost options. But others have argued they lead patients to put off both unnecessary and necessary care when confronted with spending a large sum out of pocket, and that can lead to worsened health conditions later on.
The growth in the number of workers enrolled in high-deductible plans has stalled in recent years, hovering around 29%, according to the Kaiser Family Foundation, which noted that's a potential sign that employers don't want to shift costs much further. Deductibles have also risen within PPOs and HMOs.
The National Business Group on Health's August survey showed that fewer large employers are offering high-deductible plans as the sole option for their workers. And some insurance startups are getting rid of deductibles altogether, or for certain patients who follow the advice of a primary-care physician or have chronic conditions.
But for some workers, a high-deductible health plan is the only option. Among companies offering one, 63% of small companies and 28% of large ones offered only a high-deductible plan to at least some workers, according to the survey.
Workers in smaller companies have been hit the hardest by employer cost-shifting. They face higher deductibles than workers at large companies and pay a greater share of the premium for family coverage.
The average deductible for single coverage among workers at small companies is $2,132 this year, compared to $1,355 among large firm employees. Separate from an annual deductible, most employees also face copayments or coinsurance when visiting the doctor's office or hospital. A little more than a third of employees at small businesses are in a health plan that requires them to pay more than half the cost of family coverage.
There were few big changes to the relatively stable employer market this year.
"The data don't suggest a new urgency or a new crisis for employer healthcare costs; they are more of an ongoing chronic headache," Altman explained.
But the Kaiser Family Foundation noted that the Trump administration's decision to zero-out the individual insurance mandate starting next year could change things. While employers with at least 50 full-time workers still must offer insurance, almost a quarter of large businesses said they expect at least some workers and their families to stop enrolling in coverage when the individual mandate penalty ends.
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