Employer Coverage Perilously Steady

As uncertainty surrounding the future of the Affordable Care Act (ACA) looms, private insurance premiums have continued to climb. Given President Trump’s elimination of funding for ACA cost-sharing subsidies, silver plan premiums have risen by an average of 34% for 2018 in states that use the federal Marketplace. With private insurance markets in flux and plan prices rising rapidly, do employer sponsored health plans provide consumers with a better alternative?

The annual Kaiser Family Foundation/Health Research and Education Trust (Kaiser/HRET) Employer Health Benefits Survey for 2017 offers some insight. The study notes that employer-sponsored health insurance continues to be the largest source of coverage in the United States, reaching 151 million nonelderly Americans. 

In 2017, the average annual premium for individuals in an employer-sponsored plan was $6,690 and the average annual premium for families was $18,764. This represents a modest 4% increase for individuals and a 3% increase for families over 2016 values. This small increase masks a long-spanning trend towards increasing healthcare costs: premium prices for families have risen by 19% over the last 5 years and 55% over the last ten years. 

Although employer-sponsored plans benefit workers by offering comparatively stable rates to employees, this study shows that the percentage of firms offering this benefit has continually decreased over the past decade. Declining employee benefits have been an anticipated result of the economic recession but have not recovered as the economy has stabilized.  

Given the data, it is unclear whether promoting the offering and uptake of employer-sponsored health insurance will result in better health care for the average American. Although it can shield workers from the volatility of private insurance markets, there is still wide variability in the availability and quality of coverage offered by employers. There are distinct disadvantages for workers employed at small firms, employed part-time, or those who have not been employed long enough to qualify for coverage. With the slow yet steady decline of firms offering healthcare benefits, only through systemic changes that lower the cost of health care will firms continue to be able to offer coverage to employees. 

This Policy Prescriptions® review is written by Kelly Payne as part of our collaboration with the Health Policy Journal Club at Baylor College of Medicine where she is a medical student.

Abstract

The annual Kaiser Family Foundation/Health Research and Educational Trust Employer Health Benefits Survey found that in 2017, average annual premiums (employer and worker contributions combined) rose 4 percent for single coverage, to $6,690, and 3 percent for family coverage, to $18,764. Covered workers contributed 18 percent of the premium for single coverage and 31 percent for family coverage, on average, although there was considerable variation around these averages. For covered workers in small firms, 10 percent did not make a premium contribution for family coverage, while 36 percent made a contribution of more than half of their premium. The average worker contribution for family coverage has increased from $4,316 in 2012 to $5,714 in 2017. The share of firms that offered health benefits (53 percent) and of workers in those firms covered by their employers’ plans (62 percent) remain statistically unchanged from 2016.

PMID: 28928263

Claxton, G, et al. Health Affairs. 2017; 36 (10): 1838-47.

*This article has been corrected to attribute the correct authorship