Premiums for job-based insurance rose modestly for the third consecutive year, reflecting slowed spending, even as key elements of the federal health care law went into effect.
Family premiums rose 3 percent in 2014, one of the lowest increases tracked since the Kaiser Family Foundation and the Health Research & Educational Trust began surveying employers in 1999. (Kaiser Health News is an editorially independent program of the foundation.)
Nonetheless, the cost of the average family plan rose to $16,834 annually, according to the survey of more than 2,000 employers nationwide.
While both critics and supporters of the Affordable Care Act are likely to find fodder for their positions, the report portrays 2014 as a relatively stable year for employer coverage, with little change in the type of plans offered or their costs. The percentage of firms offering health benefits (55 percent) and the percentage of workers covered at those firms (62 percent) were statistically unchanged from 2013, despite predictions of the law’s critics that many firms would drop coverage.
“We’re in a period of very modest premium increases where the feeling that the employer-based system is unsustainable may cool, at least for a while, until we see higher increases in premiums again for group insurance,” said Drew Altman, president and CEO of the foundation. “No one knows when we might see that again or how sharp those increases may be.”
Total premium costs for single coverage remained about the same, hitting $6,025 a year. And workers paid the same percentage of the premium as they have for the past several years, about 29 percent for family coverage and 18 percent for single plans.
In recent years, employers have been shifting more costs to workers, including raising workers’ deductibles, or the amount people have to pay before most benefits kick in. However, the survey found that there was no significant change in deductibles this year.
In 2014, the average deductible for single employees was $1,217, a 47 percent increase since 2009. Employees at small firms paid even more, averaging $1,797.
Among the changes noted by the survey: The percent of covered workers potentially liable for more than $6,350 in out-of-pocket costs under their plans, dropped from 14 percent in 2013 to 7 percent this year. The health law caps out-of- pocket costs, although some employers could go over that amount this year.
But the report warns that insurance may look different in 2015.
For the first time, employers with 50 or more workers are slated to face fines if they don’t offer coverage, a provision that was supposed to begin this year, but was delayed by the Obama administration.
Although 92 percent of companies with 50 or more workers already offer coverage, the survey notes that some of those employers may change eligibility rules, or the amount they pay toward coverage. Conversely, some firms may offer workers coverage for the first time to avoid fines.
Other employers, especially small ones, may decide to drop coverage, sending workers to state and federal marketplaces to buy individual policies. That was also a concern this year, but the survey found that the percentage of firms offering coverage was 55 percent, down from 57 percent the prior year, a change that wasn’t statistically significant.
On Tuesday, the credit rating firm Moody’s also issued a report, noting that employers did not drop coverage this year “primarily because [they] were not ready to ‘dump’ their employees into an untested public exchange.”
Moody’s analysts said they did not think employer fines in 2015 will have much effect because “most employers already are providing health benefits to their employees.”
Still, if the economy improves and spending on health care ticks up as consumers seek elective care they had previously delayed, that could drive up premiums, the Kaiser report notes.
Since 1999, premiums have risen an average 191 percent, with the fastest growth seen between 1999 and 2004, the report found. Even as employees’ share of the total premium has remained about the same, the total dollar amount has risen. This year, workers paid an average $1,801 toward the premium for a single plan and $4,823 toward a family plan premium.
Since the mid-2000s, annual premium increases slowed to less than 10 percent each year. This year tied with 2010 for the smallest increase, at 3 percent for family coverage.
Since those are averages, some employers and workers will have seen higher increases.
Gordon Gondek, co-owner of Dixie Restaurants in Little Rock, Ark., has about 100 employees eligible for health benefits. He said his premiums went up 12 percent this year, “which was pretty much to be expected,” said Gondek.
He’s not sure what increase he may see next year, but said the firm is “doing everything that we can to hold down our costs.”
Smaller rate increases during the past three years are attributed mainly to lower growth in health care spending overall, related to the slow U.S. economy.
Some employers are already getting a glimpse at next year’s costs.
Debby Terzo, the chief operating officer at Shattuck National Bank in Shattuck, Okla., said its insurer quoted a 30 percent increase next year to cover 15 full-time employees. “I kind of looked at it, and I thought, ‘wow.’ I put it in a drawer because I didn’t want to think about it,” she said.
Employers facing such increases often take steps to lower premiums by increasing deductibles, or the amount workers’ pay out-of-pocket for doctor office visits, drugs or hospital care.
About 41 percent of workers have an annual deductible of at least $1,000, while 18 percent pay at least $2,000 a year, according to the survey.
“One of the reasons why we have moderate premium increases is because deductibles are going up, plans are becoming less generous and it makes people more sensitive to whether they use health care,” said Paul Fronstin of the Employer Benefit Research Institute, a Washington think tank.
–Julie Appleby, Kaiser Health News
I’m sorry, but with rising taxes, fees and skyrocketing utilities, families DON’T HAVE $17,000 a year to spend on this.
Our politicians must take a pay cut, from the bottom, all the way to the top. Most now make more than the average citizen. Unnecessary Government programs MUST BE CUT. We must totally eliminate campaign contributions of any kind or American families will be an endangered species.
Does our government live on another planet than the one we are living on?
Diana L says
Single payer, universal health care is the answer, the only answer.
Percy's mother says
Have you ever lived in the UK and experienced their health care system? Apparently not. Having been in the medical arena for 32 years, I can tell you in 5-10 years, you’ll be bemoaning the “old days” when you could get in to see a well-trained doctor. . . they’re going to be a thing of the past. Why? Because the costs of running a healthcare operation are skyrocketing due to govt rules and regulations while the costs of getting a good medical education also rise. On graduation, medical students won’t be able to pay back their loans. Hence, less and less will go into the field, more will leave the field and in the end, your choice will be . . . . well, I’ll let you find out for yourself. It’s already happening. The general public isn’t aware of it yet. If I were you, I’d go and spend 10 years in the UK and get your health needs met there (or in Canada), and then come back and yell for a single payer system. I’ll just sit back and watch and listen.
Diana L says
I have talked to others from different countries that have universal health care, they tell a different story than what you stated.
May I say again, the USA needs universal health care.
Response to Percy’s Mother
Have you lived in the UK?
I have lived in the UK for 46 years and in this country for 17 years. I am an American Citizen and I am fortunate that I have employer health care coverage and I have to pay my own co-payments, deductions etc.
UK healthcare is not ‘free’ and yes it is a single payer system to a certain extent. Every worker pays a percentage of their income (the same as medicare tax from your paycheck in USA) from their paycheck. Also, the VAT (our sales tax) is higher and a portion of that goes towards the National Health Service. Therefore, people not working for whatever reason are still paying into the system.
The UK Healthcare System is overwhelmed at the moment because once the European Union decided that people from certain European countries could freely live and work in the UK the system became overloaded. Yes, there are people from other countries that go to the UK and abuse the system and Emergency Rooms. Yes, I agree that there are waiting lists in some areas of the country, mostly large cities. If the health issue is urgent you DO NOT WAIT.
BUT, my Brother two years ago had open heart surgery – no wait, no doctor bills, no hospital bills, no co-pays, no bills for medicine (he is a senior and seniors over 60 and children in the UK do not pay for prescriptions) Everybody else does and I believe it is a flat fee of around $12 per item. Nobody pays to visit a doctor or hospital.
His partner of many years had an illness which resulted in many hospital stays and eventually death. No waiting, no bills whatsoever and excellent treatment.
My daughter last year was knocked off her bicycle by a hit-and-run driver. She was taken to hospital, had surgery and many follow up visits. Excellent treatment and NO COSTS, not even for the ambulance services. I could go on and on with examples. People not having to worry about whether they can still afford to eat, pay their bills or lose their home!
Also, many large employers give their employees and families private health insurance (a perk). The cost is covered 100% by the employer for the employee and family – no co-pays, limits or deductions. This is a great way of helping the overloaded National Health Service.
Obviously, Percy’s Mother, there are going to have to be some adjustments in the way medical education works. Many Medical Professors make salaries that are astronomical– way beyond what Doctors in actual practice make. In addition, they are often researchers, who can pad their already exorbitant salaries by working with Pharmaceutical companies (many of whose boards they serve on), developing drugs that those Pharmaceutical companies make a mint on…When, in fact, most of the research start-up costs are not funded by those Pharmaceutical companies at all, but by NIH and other government grants that taxpayers pay for…Grants that are applied for, and secured by, those same Medical Professionals, in the name of research. See how the circle completes itself? Reform is needed in ALL aspects of healthcare.
Bunnell Resident says
So, Almost $17,000 average premium per family, 40% of families in this country pay no federal income taxes at all, and the government wants a single payer system run by the taxpayers. Brilliant!
Bunnell Resident says
We don’t need universal health care. We need Americans to be better consumers of health care services. This will never happen if someone has no personal stake in the cost of services they are demanding. Who would buy a car today and wait 2-3 months to find out how much they paid for the car? No one of course! Yet health care providers do not have to advertise in any way how much they will charge you for services. We the consumers are complicit in this racket because we continue to enable this fraud to perpetuate itself. Why do we do this? Because we don’t care what it costs as long as we feel someone else is paying for it. For the US citizen from UK, I take you came here and became a citizen for a reason. If everything is so great there, why don’t you go home and enjoy your universal health care?
To Bunnell Resident
Yes, I came here for a very good reason. I met and married my American husband of sixteen years.
After I married,I spent a large amount of money to go through the immigration process legally and am proud to be an American Citizen. You obviously missed my point in response to Percy’s Mother. I was stating that a universal system works when everybody pays into the system by using the payoll system and the sales tax system. By doing that the treatment for the most part is equal for everybody.
I find it very offensive that one American Citizen should tell another American Citizen to go back to their country of birtth. America is my home.