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Employer-sponsored insurance: Relative calm in the storm

Employer-sponsored health insurance has been a relatively safe harbor from all the politics surrounding the ACA and its possible repeal and the instability in the individual market.

So it wasn’t a big surprise when results from the annual Kaiser Family Foundation/Health Research & Trust Employer Health Benefits Survey came out in September and showed even trend lines.

Annual family premiums for employer-sponsored health insurance rose an average of 3% in 2017, right in keeping with six years of relatively modest increases. Just over half (53%) of 2,137 companies in the survey offered health benefits to at least some of the workers in 2017, similar to the percentage that offered them last year. And just under half (48%) of workers are in a PPO plan, although that proportion has, in fact, been slipping.

This isn’t to say that employer insurance is static; rather, it’s that the changes have been gradual—and they haven’t generated nearly the kind of political heat and media coverage as the individual market and Medicaid. One notable change has been in the number of employees with high-deductible plans with some kind of savings option, either a health reimbursement arrangement or a health savings account. For the purposes of this survey, a plan was classified as a high-deductible plan if the deductible was at least $1,000 for a single person or $2,000 for a family. In 2006, just 4% of employees had high-deductible coverage. This year, 28% did. During this same period, the percentage of employees in HMOs dropped from 20% to 14% and those in PPO plans decreased from 60% to 48%.

Distribution of health plan enrollment for covered workers, by plan type, 1988–2017

Source: Kaiser Family Foundation. Employer Health Benefits Survey 2017

A longer look back also shows how premium costs have hit employees. A family’s share of the premium has been fairly steady and has hovered around 30% over the past couple of decades; in 2017, it was 31%. For individuals, the percentage has inched up from 14% in 1999 to 18% this year.

But because premiums have gone up so much, what a family pays for coverage on a monthly basis has more than doubled, on average, in the past decade, according to this survey. In 2005, it was $226 per month. This year, it was $476. The trend was similar for single coverage. Meanwhile, wages and salaries have been fairly flat.

One of the major takeaways from the authors of the report is that employer-sponsored health insurance adjusted to the ACA without too much disruption and that repeal and replace—if it ever happens—won’t ruffle it much, either.

The threat of the Cadillac tax had some employers figuring out ways to bring down the cost of coverage through cost sharing and other means, but the tax keeps on getting delayed, and there seems to be little political appetite for actually implementing the tax. Depending on what happens to the ACA, some employers may cut back on offering coverage to lower-paid employees if employer requirements are changed, wrote Kaiser. And some may increase cost sharing for preventive services if the ACA prohibition on cost sharing were to be eliminated. “But,” they wrote, “the larger metrics measuring costs and coverage are unlikely to change in any significant way.”

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