US Employer-based health insurance premiums, deductibles rise
- The average annual single-coverage premium for employer-based health insurance increased 4.4% to $6,368 in 2017 and family coverage premiums rose 5.5% to $18,687, according to a new State Health Access Data Assistance Center report. The average single health plan premiums had increased from 2% to 2.3% in the previous three years.
- The report found significant differences by state for premiums, deductibles and out-of-pocket costs. It showed that 15 states had significant premium increases from 2016 to 2017, while only one (Utah) had a significant decrease.
- The center said 93% of employees with employer-sponsored insurance faced deductibles in 2017. The average single-coverage deductible rose 6.6% to $1,808. The average family coverage deductible increased 10.7% to $3,396.
The state of employer-based health insurance plays a critical role in healthcare. Whether employers provide health insurance and how much members spend on plans and services tend to have a bigger overall impact than other coverage types, including individual insurance, Medicare and Medicaid.
Employer-based health insurance covers more than half of Americans. To put that into perspective, only 7.5% are covered through individual insurance.
More employers are offering health insurance than in recent years. The percentage of private businesses offering health plans increased in 2017 for the first time in a decade. The Employee Benefit Research Institute recently reported that the strong economy is behind the trend.
However, the National Federation of Independent Business said more than half of small businesses cite costs associated with health benefits as their No. 1 problem.
Employers are increasingly turning to high-deductible health plans as a way to control healthcare costs. That means more out-of-pocket costs for employees and providers relying more on patients to pay for care. This could also lead to more uncompensated care and hospitals revamping their revenue cycle to focus more on patients and less on private payers.
The latest report found that 48.7% of people in employer-sponsored plans were in high-deductible plans. That was a 14.2% increase in one year. Just five years ago, 30.3% of members in employer-based plans had a high-deductible plan.
The national average out-of-pocket limit was $4,246 for single coverage, a 3.6% increase, and $8,183 for family coverage, a 3.8% increase.
More plans have implemented a separate annual deductible for prescription drugs. The center found that 16.1% of employees had a separate prescription drug deductible, which averaged $360.
Most people with employer-based plans also paid a copay for office visits. According to the report, 68% of those members paid copays to see a general practitioner and 59% to see a specialist. The average copay increased 2.4% to $26.50 and a 4.2% increase to $41.97 to see a specialist.
Despite those increasing costs, employer-sponsored insurance remains a better deal on average for Americans than individual coverage. Avalere recently said the average silver plan in the exchanges in 2018 charges $642 a month in premiums. That’s $7,704 per year, which is well more than the $4,246 for the average employer-based single coverage.
However, employer coverage is still much more expensive thanMedicare Advantage plans. The average MA premium is only $29.81 per month in 2018, or $357.72 over 12 months. Plus, MA premiums are expected to decline further next year, so seniors will continue to enjoy cheaper rates than those with employer-based plans.