Premiums for the largest source of health insurance in the U.S. continue to increase at a rate that’s remarkably low considering double-digit increases of the past.
This year, premiums grew 3 percent for employer-sponsored health plans, following last year’s 4 percent rise, according to results from a national survey released Wednesday.
But coverage remains expensive, with the average family plan now costing more than $18,000, according to the Kaiser Family Foundation. And one way employers are keeping a lid on premiums is by passing more costs to patients when people use care.
“What we’re really seeing this year, but we’ve seen it develop gradually, is a shift in what insurance is for most Americans — from more comprehensive to skimpier coverage,” said Drew Altman, president of the California-based Kaiser Family Foundation. “I think it’s the biggest change in health care in America that we are not really debating.”
There’s been much more political focus, Altman noted, on the federal Affordable Care Act, which continues to transform the market where individuals purchase coverage outside of employer groups.
About 5 percent of Minnesotans purchase coverage in the individual market, which serves people who are self-employed or work for companies that don’t provide health insurance. Employers provided benefits to more than half of all state residents in 2013, according to data from the Minnesota Department of Health.
The results released Wednesday were based on survey responses from more than 1,900 small and large employers across the country, including Minnesota.
This year, 29 percent of all workers are in high-deductible health plans, up from 20 percent in 2014, according to the Kaiser survey. The average deductible for single coverage averages $1,478, up $159 from 2015, or 12 percent.
Half of all covered workers face deductibles of at least $1,000 annually for single coverage. In some cases, however, employers contribute funds to a health savings account, or health reimbursement account, that effectively lowers the exposure to out-of-pocket costs. After factoring these contributions, the share of covered workers with deductibles of at least $1,000 is 38 percent, according to the survey.
A general annual deductible is the amount a health-plan enrollee must pay out of pocket before all or most services are covered.
“Since 2006, the average deductible among covered workers with a deductible has increased 153 percent, compared to a 52 percent in the average premium for single coverage,” researchers said in an analysis of results published by the journal Health Affairs.
The Kaiser numbers don’t include state-level data, but the national trends line up with what’s been happening in Minnesota, said Stephen Parente, a health economist at the University of Minnesota.
Bob Stein, president of the Minnesota Association of Health Underwriters, a trade group for insurance agents, said of rising deductibles: “That’s just become part of the new system now.”
There have been widespread complaints about high deductibles in the individual market, where people have the option of buying through a government-run “marketplace” like Minnesota’s MNsure exchange.
But the focus in the individual market has been on premium spikes, where Minnesota shoppers saw average rate increases for this year of 41 percent. Earlier this month, the federal government released data showing Minnesota insurers in the individual market want increases for next year ranging from 36 percent to 67 percent.
Insurers in several states are proposing big jumps, while others are significantly scaling back offerings in the individual market due to financial losses. Minnetonka-based UnitedHealthcare, the nation’s largest health insurer, is planning to drop most of the exchanges — also called “marketplaces” — where it currently competes.
“The premiums in the employer market — it’s a stable market, and they’re related to the underlying changes in health care cost,” said Gary Claxton, a researcher with the Kaiser Family Foundation.
“The places that have high premium increases in the public marketplaces, the high increases are because the premiums for prior years were insufficient to cover the morbidity of the people who enrolled,” Claxton said. “Very little of it is actually associated with health cost trend — it’s about getting the pricing to the correct level.”
The Kaiser survey put the average annual premium for family coverage in employer plans this year at $18,142, with the typical worker picking up about 30 percent of that total, or $5,277. A family of four buying on MNsure this year can purchase a policy with “gold” level benefits for $11,940 in the Twin Cities, and $15,468 in Rochester, before federal tax credits available to certain income levels.
This year, a federal health law requirement fully kicked in that requires employers with the equivalent of at least 50 full-time workers to offer health insurance or pay a penalty. While there have been fears that this so-called “pay or play” requirement would prompt firms to drop benefits and simply pay the fine, the survey results suggest that hasn’t happened.
About 56 percent of employers offer health benefits to at least some of their workers this year, which is flat from last year, the survey found. And there’s not evidence, researchers said, that employers are reducing workers’ hours to avoid the coverage requirement — another fear related to the health law.
The U.S. Department of Health and Human Services on Wednesday issued a statement saying the survey results show the federal health law is helping to make coverage more affordable.
Republicans in Minnesota countered with a statement on a recently released report that raised concerns about poor financial management at the exchanges, including MNsure.