Costs of Employer Health Plans Are Rising Faster Than Wages, Inflation
Annual costs for employer-provided health plans are rising at a faster clip than wages and inflation, the 2019 Employer Health Benefits Survey by the nonprofit Kaiser Family Foundation shows.
Premium contributions, copays, and deductibles rose by 8 percent for a family plan in 2019 and by 4 percent for individual coverage. Workers’ wages increased by an average of 3.4 percent, and overall inflation was 2 percent. Employees contribute on average $6,015 for an employer family plan.
The average premium for family plans increased by 22 percent over the last five years and 54 percent since 2009, the report states. In 2009, individual and family plans cost an employer an average of $3,515 and $9,860, respectively. Worker contributions jumped by 25 percent in the last five years and are 62 percent above what they were ten years ago.
The results are based on 2,012 interviews with large and small public and private employers. The annual premium for an employer-based family plan ranges from $18,433 to
$21,002, up 5 percent over last year, and $6,211 to $7,103, up 4 percent, for individual coverage. On average, employees contributed between 18 and 24 percent towards their premiums. Helping to offset some of this expense is employer contributions to a Health Savings Account. Those contributions ranged from $572 to $3,255.
Health Care Gold Rush
There is no such thing as a free employee benefit, says Devon Herrick, a health care economist and advisor to The Heartland Institute, which publishes Health Care News.
“Economists agree health benefits are just a noncash form of compensation,” said Herrick. “As such, the cost of coverage is ultimately borne by workers in lieu of greater cash wages. If the average employee realized how much health benefits were costing them, they’d demand control of the funds.”
Health insurance is one of the most attractive benefits for employees, according to Glassdoor Economic Research, especially after Obamacare upended the individual market where consumers buy plans outside of the workplace. The plans became prohibitively expensive, and between 2016 and 2018, 2.5 million unsubsidized people dropped out of the exchanges (see related article, page 5).
Of the firms in the Kaiser survey, 54 percent of small employers (less than 199 workers) don’t offer health insurance. The Trump administration is attempting to change that by opening the door for tax-advantaged Health Reimbursement Accounts which allow employees to shop for their own coverage while receiving the tax benefits of employer-provided health insurance.
Herrick says such reforms are sorely needed.
“Health care has turned into a gold rush where ‘stakeholders’ grab as much as they can from employers and employees,” said Herrick. “This cannot go on much longer before workers rebel.”
AnneMarie Schieber (firstname.lastname@example.org) is managing editor of Health Care News.
2019 Employer Health Benefits Survey, The Kaiser Family Foundation, September 25, 2019: