Kaiser Family Foundation, September 25, 2019
This annual survey of employers provides a detailed look at trends in employer-sponsored health coverage, including premiums, employee contributions, cost-sharing provisions, offer rates, wellness programs, and employer practices.
Annual premiums for employer sponsored family health coverage reached $20,576 this year, up 5% from last year, with workers on average paying $6,015 toward the cost of their coverage. The average deductible among covered workers in a plan with a general annual deductible is $1,655 for single coverage. Fifty-six percent of small firms and 99% of large firms offer health benefits to at least some of their workers, for an overall offer rate of 57%.
(An 8 page Summary of Findings and the full 234 page Report are available at the link below.)
Trends in the market for employer-based coverage have been moderate for several years now. Premiums go up each year, but in the low to mid-single digits, which seems tame for those who remember the much higher increases in the early 2000’s and periods before. Cost sharing, particularly deductibles, has increased meaningfully over time, but the largest percentage increases were now a few years ago. New ideas and new approaches – things like narrow networks, value-based pricing, telemedicine, direct contracting – are tried and sometimes gradually implemented, but with modest impact on the basic structure of the market or the overall cost of coverage. Even though actual cost levels are quite high (the average family premium exceeds $20,000 for a family of four), an expanding economy and historically low underlying health care cost growth appear to have dampened any impatience for big changes, although predicted economic slowing over the next couple of years could push employers to consider more significant actions.
One thing that is new this year is the context: the public debate over expanding Medicare or creating public program options is raising questions about the performance of employer-based coverage that are rarely triggered when looking only at annual performance. In particular, those suggesting a bigger role for public programs raise issues about the cost and affordability of health care for the society overall and for individuals and families. Although premium growth has been low, it still exceeds inflation, and the prices employer plans pay for care are rising faster than either Medicare or Medicaid. One side of the coin calls this a cost shift from public plans to private payers; the other side suggests a lack of any real cost-control efforts in private plans. Negotiating lower prices means that plans have to be willing to tell higher-priced providers they cannot be in the network, but as the survey finding show, narrowing networks is both unpopular with employers and, due to dispersed workforces and rural challenges, impractical for many. Other than increasing cost-sharing, this is the most (and maybe only) powerful cost-reducing tool that private plans have, but it is rarely employed.
How to best assure affordable access to care for individuals and families is really the main theme in the debate about public plan options, and our polling suggests this issue raises important questions about the adequacy of employer-based plans. In a recent survey conducted by KFF and the LA Times, 40 percent of non-elderly adults with employer-based coverage said that they or a family member had difficulty affording health insurance or health care or had problems paying medical bills. Roughly one-in-two said that they or a family member had skipped or postponed getting health care or prescriptions in the past 12 months due to costs. Among those with employer-based coverage who say that someone under the plan has a chronic health condition, roughly three in five say they are confident that they have enough money or health insurance to afford the cost of a major illness; this percentage falls to just one-in-three for those in plans with the highest deductibles ($3,000 for single coverage; $5,000 or more for family coverage).
This survey shows other affordability issues as well, particularly for some identifiable groups. Covered workers in small firms face relatively high deductibles for single coverage and a meaningful share face substantial premium contributions if they choose family coverage. Covered workers in firms with large shares of lower-wage workers on average face higher deductibles for single coverage and must contribute a greater share of the premium for family coverage than workers in firms with a smaller share of lower-wage workers. When people talk about the 153 million people with employer-based coverage they often gloss over the very real cost differences for different groups of workers across the marketplace.
Regardless of its outcome, the national debate about expanding Medicare or creating public program options provides an opportunity to step back and evaluate how well employer-based coverage is doing in achieving national goals relating to costs and affordability. In doing so, it will be important to look past averages and examine how well the market serves the many different types of employers and working families in the many different circumstances that they face.
By Don McCanne, M.D.
This somewhat mundane report on employer-sponsored health plans is apt to be glossed over since it represents more of the same – that costs of the largest source of health insurance in the United States continue to increase. Some might celebrate the fact that increases in premiums have slowed to 5 percent this year, but that is still over twice the rate of inflation! Our most prized source of insurance (if you believe the media) has failed miserably in its quest to make health care affordable for individuals and families.
Health insurance premiums for a family of four now average over $20,000. Though a portion of that is nominally paid by the employer, it is actually paid entirely by the employee because the employer’s portion is paid through forgone wage increases of the employee. Further, employees of small firms and low-income employees receive less generous health benefits even though they are less capable of paying premiums and out-of-pocket cost sharing. In fact, the health benefit offer rate overall is only 57 percent. That great insurance that the media keeps telling us we want to keep has premiums that continue to rise faster than inflation, fails to provide adequate financial protection for low- and middle-income families, and isn’t even offered to 43 percent of the workforce, particularly disconcerting when considering that there have been 67 million job separations in the past year (Bureau of Labor Statistics) – not exactly a stable source of insurance coverage.
This is serious. We are being told that the majority of the public will accept Medicare for All only if they continue to have the option of being insured through private plans, especially those offered by their employers. Yet the public is deliberately being confused as to what Medicare for All is. Is it single payer, or is it merely another option in our fragmented system of a multitude of private and public plans? The distinction is crucial. Too many still don’t understand what single payer is, even if they think they do.
Providing Medicare as an option leaves in place all of the dysfunctions of our current health care financing system. Today’s report shows that even employers have been unable to make a dent in the rate of health care cost escalation, leaving care unaffordable for the majority, while remaining incapable of tackling the profound administrative waste that is a major driver of our uniquely high costs, plus they cannot possibly benefit those who are not in their employ, not to mention failing to benefit the 43 percent of their employees who do not enroll in their plans.
On the other hand, a bona fide single payer model of Medicare for all automatically includes everyone for life, recovers hundreds of billions of dollars in administrative waste, switches to an equitable method of financing that everyone can afford (yes, progressive taxes!), and provides better benefits than essentially all employer-sponsored plans. The other proposals mislabeled as some variant of Medicare for All accomplish none of these goals.
Though many still object to the single payer label as being too wonkish and not well understood by the general public, unfortunately the Medicare for All label has been stolen from us and is being used frequently to refer to some form of Medicare as a public option, accomplishing essentially none of our goals of reform. Until we can agree on a better term, we should insist on “Single Payer Medicare for All,” and then we should be sure that everyone understands what single payer means – affordable, comprehensive care for everyone.
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