While Premiums Soar Under Obamacare, Costs of Employer-Based Plans Are Stable

https://www.nytimes.com/2017/09/19/health/health-insurance-premiums-employer.html

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In sharp contrast to the soaring health insurance premiums in many Affordable Care Act marketplaces, the cost of coverage for the vast numbers of people who get insurance through their jobs rose relatively little this year, continuing a period of remarkable stability in the employer market, according to a national survey released Tuesday.

The annual premium for family coverage rose an average of 3 percent to $18,764 this year, according the Kaiser Family Foundation, a nonprofit group, which conducted the annual survey of employers. That is the sixth straight year that employer-provided policies have increased by well under 5 percent, according to the survey. Employers paid the bulk of the costs, the survey found, with workers shouldering an average of $5,714, a year for a family policy.

About 151 million people are covered through an employer, and the insurance environment for many of those companies is characterized by “a remarkable stubborn stability,” said Craig Garthwaite, a health economist at the Kellogg School of Management at Northwestern University.

The exception is the smallest companies, which are still finding it challenging to afford insurance for their workers. In recent years, a growing number of smaller companies have stopped providing health benefits, according to the Kaiser data. Over the last five years, the percentage of businesses with under 50 workers offering coverage has fallen from 59 percent to 50 percent. In 2001, two thirds of those employers offered benefits.

Health costs remain an issue even for families with stable employer coverage. This year’s modest rise still outpaces both overall inflation and the increase in workers’ earnings. “The sticker shock for people is still very real,” said Drew Altman, the Kaiser foundation’s chief executive.

But it is a calm environment compared to the marketplaces where individuals shop for coverage under the Affordable Care Act. While fewer than 20 million Americans buy their own insurance, the tribulations of the individual market have captured most of the public’s attention. The average cost of a benchmark plan in the individual market rose 20 percent this year, according to Kaiser, as insurers tried to stem their losses.

The combination of political uncertainty over the future of the health law and insurer unrest may result in a similar jump in individual premiums for 2018. Insurers must make their final decisions where to sell and what to charge in the Affordable Care Act marketplaces by the end of the month.

Early results from another employer survey, conducted by Mercer, a benefits consultant, indicate that businesses expected to see health benefit costs increase 4.3 percent for 2018 after making changes like switching insurers or raising plan deductibles. “Our take away from this is that the trend for employers remains stable, and it remains low,” said Tracy Watts, a senior partner at Mercer.

As a result, employers may not feel the need to make any drastic changes. “What I see in our renewals is very predictable and very steady,” said Lisa Trombley, benefits manager for Kelly Services, the Troy, Mich., staffing company.

Overall, health care costs have increased at historically low rates in recent years, said Matthew Fiedler, a health economist at the Brookings Institution. “We’ve got lots of indicators, across a constellation, that the health care trend is pretty low,” he said.

While employers credit their efforts to slow down costs, others, including Mr. Fiedler, say some of the changes enacted under the Affordable Care Act have also contributed. The federal law reduced what Medicare pays for care, which allows private payers to strike better bargains, he said, and the government has been encouraging experiments in how to pay doctors and hospitals in new ways that may reduce spending.

Even the deductibles people pay toward their own medical bills, which have gone up steadily in recent years, seem to be holding steady. Deductibles rose only slightly this year, averaging $1,505 for a single person, according to Kaiser.

While employers have relied on steeper deductibles to lower their own costs, companies are recognizing that they have reached the limits of what they can ask their workers to pay, said Michael Thompson, the chief executive of the National Alliance of Healthcare Purchaser Coalitions, which represents employers. “We’re running out of runway to keep cost-shifting to employees,” he said.

But people remain confused about how the turmoil in the individual market affects them, even when they get their coverage through an employer, Mr. Altman said. In a recent Kaiser poll, six out of 10 Americans worried that the higher rates being charged in the A.C.A. markets would negatively affect them, he said.

The two markets are distinct, and the groups of people being covered are “like night and day,” Mr. Altman said. The individual market has a large portion of people who need expensive medical care, which has led to sharply higher prices some areas. The large employer market can spread the costs of expensive care more easily over the greater numbers of people that work for large companies.

Small businesses, however, can’t spread their medical costs over a large work force. Premiums “have gone up double digits up here,” said Martin Dole, the controller for Gateway Motors, a car dealership in White River Junction, Vt., which covers 28 people.

The family plan Gateway offers costs more than $700 a month and comes with a deductible of $9,500, which workers “hate,” he said. Health care is one of the dealership’s largest expenses, Mr. Dole said, and he is concerned that the dealership may not be able to afford to offer coverage in coming years.

Larger companies tend to view health benefits as a key component of compensation and essential to attracting employees. Companies and their workers also enjoy a generous tax subsidy for employer-sponsored coverage. While there has been some discussion about reducing or eliminating that subsidy, including as part of the push for a single-payer Medicare-for-all plan that would replace the current system with the one now providing coverage to people 65 and older, there seems to be significant support for maintaining the current system.

“It’s pretty much business as usual,” said Larry Boress, the chief executive of the Midwest Business Group on Health, a regional group of employers. Companies are holding down costs through a variety of efforts, like offering workplace clinics or more telehealth services so employees do not have to go to the doctor or show up in the emergency room.

Employers will continue to look for ways to reduce what they pay toward their workers’ health care costs, he said. “Whether the A.C.A. exists or not, they will clearly do that,” he said.