Workplace Health Insurance Premiums Finally Stopped Skyrocketing. Now For The Bad News.

Deductibles keep getting bigger, and costs are still growing faster than paychecks.
This is the story for the more than 150 million Americans who get their health insurance through employers.
This is the story for the more than 150 million Americans who get their health insurance through employers.

WASHINGTON ― Employers that provide health insurance, who cover nearly half of all Americans, saw modest premium increases this year, which is good news. But wait until you see the rest of the findings of a new survey.

The average annual cost of an employer-sponsored family plan rose just 3 percent to $18,142 this year, and the average annual cost for an individual plan stayed virtually the same at $6,435. Those figures, which combine the amounts that employees and employers pay, come from the survey published Wednesday by the Henry J. Kaiser Family Foundation and the Health Research and Educational Trust and from an article appearing in the journal Health Affairs.

In the messy, expensive U.S. health care system, such small increases constitute a positive development.

The National Business Group on Health previously reported that companies expect just small premium increases next year, too. And all this is happening during a period of lower-than-normal growth in overall health care spending.

But beneath those top-line figures are some not-so-positive developments, like a continuing trend toward workers facing higher and higher deductibles they must meet before their benefits kick in and having to pick up a larger share of the premium costs while employers kick in less and less.

The following charts from the Kaiser Family Foundation/HRET report show just how much more expensive and less generous Americans’ job-based health benefits have become over time.

A family plan cost workers about $1,500 in 1999, $4,000 in 2010 and $5,300 this year, while their employers’ percentage share of the total premium has been creeping downward.

Even more striking is this graph, which shows how job-based health insurance costs have dramatically outpaced incomes and economic growth (as measured by inflation) over that same time period. And that continues despite relatively slow premium growth over the past five years.

These next two graphs show that the value of health care coverage has declined even as premiums rose: A growing share of workers are enrolled in plans with high deductibles, and the deductibles themselves are increasing. As a result, employees are shouldering more of the costs of their health care over time.

This is happening because health care keeps getting more expensive ― a trend that began long before the Affordable Care Act was enacted. Higher costs are the main driver of rising premiums and larger deductibles.

But the employer insurance market isn’t struggling with other problems that plague the Obamacare market. Perhaps most importantly, the employer market covers a sustainable mix of healthy and sick customers, unlike the Affordable Care Act exchanges.

All the attention lately on Obamacare’s challenges makes it easy to forget that most Americans don’t get their health coverage that way. Despite a widespread public misconception, none of its issues affect health care costs and benefits for the vast majority of people.

Jobs are the biggest source of health benefits, and the more than 150 million people who are covered by employer-sponsored health plans dwarfs the 22 million who use an exchange or buy plans directly from insurers. Another 68 million are enrolled in Medicaid and 55 million use Medicare.

The Affordable Care Act left the employer market for health insurance mostly untouched. Even provisions of the 2010 law directed at employers ― such as the requirement that companies with at least 50 full-time workers offer health benefits ― have had minimal effect overall to date. The main reason: most employers, and nearly all large businesses, already provided health benefits that met the standards of the law ― and plan to continue doing so, as the new survey shows.