Health insurance premium growth exceeds wage increases, inflation

Les Masterson

Oct. 4, 2018

Dive Brief:

• The average employer-sponsored health insurance family plan premium increased by 5% to $19,616 for 2018 while average single plan premiums rose 3% to $6,896 for the year, according to the annual Kaiser Family Foundation Employer Health Benefits Survey.
• Premium increases dwarfed both wage increases (2.6%) and inflation (2.5%) over the past year and decade. And employers continue to shift more out-of-pocket costs onto employees. KFF said that 85% of workers have plans with deductibles compared to 81% in 2017 and 57% 10 years ago.
• The survey also found that companies are increasingly collecting worker health information through mobile apps and wearable devices like a FitBit or Apple Watch. Now, 21% collect that information, which is a 14% increase in a year.

Dive Insight:

More employers are offering health insurance thanks in part to a strong economy. A recent Employee Benefit Research Institute report showed that the overall percentage of private-sector employers offering health benefits increased in 2017 for the first time since 2008.

Although public plans and the Affordable Care Act plans get more press, employer plans are the engine that drives most Americans' healthcare coverage. More than half of U.S. health plans are employer-sponsored.

However, employees spending more on their healthcare could have a direct impact on health systems, which are increasingly relying on patients to pay a larger share of their health costs. That shift can put a strain not just on patients, but also health systems.

In announcing its 20th annual survey, which spanned 2,200 small and large employers, KFF surmised that companies will soon need to find other ways to shift costs.

"If underlying healthcare prices and service use begin to grow as part of stronger economic growth, employer and health plans may need to look for tools other than higher cost sharing to address the pressures that would lead to higher premium growth," the authors wrote.

Premiums have leveled off in employer-based insurance compared to a decade ago. Increases of 3% and 5% are a far cry from the double-digit annual increases seen in the 2000s.

But lower premiums coincided with higher other out-of-pocket costs, such as deductibles. The average single plan deductible is $1,573 in 2018. That's a 212% jump over the average deductible of $735 a decade ago.

The report found that one-quarter of covered workers now have plans with a deductible of at least $2,000, an increase from 15% five years ago. Small companies are especially turning to higher deductibles. KFF said 42% of companies with fewer than 200 workers have deductibles of at least $2,000.

"Deductibles of $2,000 or more are increasingly common in employer plans, which means the bills can pile up quickly for workers who require significant medical care," study lead author Gary Claxton, a KFF vice president and director of the Health Care Marketplace Project, said in a statement.

In looking at technology trends, KFF found employers are increasing looking to telemedicine. About three-quarters of large companies provide telemedicine care, an increase from 63% last year and 27% in 2015.

Whether employees are interested is another issue. Despite offering telemedicine, KFF found few workers are taking advantage of those services in place of in-person physician visits.

Another finding? Businesses are using cost-saving measures like high deductibles, but they're still not interested in restricted networks, which are common in Medicare Advantage and ACA plans.

KFF said 17% of large companies that offer insurance have a high-performance or tiered provider network in their largest health plan, which is similar to 2017.

Only 5% of large companies with health insurance have a plan with a narrow network. That mirrors the past two years.

Another cost-saving lever, restricted hospitals and health systems, is barely being implemented. Only 3% of large companies have a health plan that restricts a hospital or health system. That's a similar number to last year.

These figures show that employers continue to rely on shifting costs rather than implementing restrictions. Shifting costs to employees is an easier practice than telling them that they can no longer see their doctor and have less flexibility. As costs continue to rise, though, employers may soon not have that luxury and could have to turn to restricted networks to contain costs.

https://www.healthcaredive.com/news/health-insurance-premium-growth-exceeds-wage-increases-inflation/538814/