Premiums in employer-sponsored health plans have been increasing at low rates compared to historical norms, but there are signs the pace will pick up in 2018.
Recent reports from three national benefits consultants suggest premiums will increase by 4 to 5 percent next year for large employers after accounting for benefit changes and carrier negotiations.
That’s a higher rate of change than the 3 to 4 percent increases seen in 2017, according to a review of recent reports from Aon, Mercer and Willis Towers Watson.
A report this week from the Kaiser Family Foundation found that rates in 2017 are up 3 percent to nearly $19,000 for family coverage, although the survey included responses from both small and large employers.
None of the reports breaks out numbers for Minnesota, but anecdotal evidence suggests that premium increases next year for large employers in the Twin Cities could be even higher, said David Martin, an executive vice president with Associate Benefits and Risk Consulting.
“We have consolidations in the providers and hard negotiations that are increasing costs,” Martin said via e-mail. “Big capital expenditures are continuing at facilities that will require revenue. Utilization is also increasing and lifestyles aren’t helping.”
Alycia Riedl, a consultant in Minneapolis with Willis Towers Watson, also cited numbers that suggest a faster rate of increase for large employers next year in Minnesota.
“A lot of that is being driven by pharmacy,” Riedl said, although she noted the pharmaceutical cost impact is somewhat uniform across the country.
The Kaiser report this week tracked the continuation of low premium growth in the United States, at least by historical norms. The cost of family coverage in employer plans increased 4 percent in 2015 and 3 percent in each of the following two years, according to the California-based foundation’s survey of employers.
Since 2012, average family premiums in employer plans have increased by 19 percent, Kaiser says, which is a much slower rate than the cumulative increases of 30 percent between 2007 and 2012 and 51 percent between 2002 and 2007.
The Kaiser survey found that workers in 2017 are contributing on average $5,714 per year toward premiums, which is 31 percent of the total.
Employer plans are the largest source of health insurance in Minnesota, with state figures showing employer plans covered about 55 percent of residents here during 2014.
The Minnesota Council of Health Plans, the trade group for local insurers, says it doesn’t have projections for 2018 rates. The group cited data from Minneapolis-based Minnesota Community Measurement showing medical bills in the state grew about 3 percent between 2016 and 2017 — a lower rate than the 5.4 percent increase during the previous year, but still faster than growth in household wages.
“Most people under 65 get care through work, and that has been pretty stable for the past few years,” said Jim Schowalter, the trade group’s chief executive, in a statement. “But what people pay keeps going up because medical bills keep going up.”