Workers Feeling Pinch Of Employer-Based Coverage

Oct. 26--More employees slowly moved into lower-cost health insurance plans or enrolled in high-deductible health plans this year, contributing to a 2.4 percent increase in employers' total health benefit costs per employee, according to a survey released Wednesday.

That was one of the lowest increases in decades.

Mercer's annual national survey of employer-sponsored health plans said about three in 10 covered workers are now enrolled in high-deductible consumer-directed health plans.

Nationally, the survey said, total health benefits costs averaged $11,920 per covered employee in 2016.

In the Kansas City area, Mercer said, total health benefit costs for covered employees rose 5 percent to an average of $12,101 per employee.

Two-thirds of the regional employers included in the survey said they offered their employees plan choices, including high-deductible consumer-directed health plans with health savings accounts or health reimbursement account features.

While such plans play a role in reducing overall health insurance costs, two-thirds of employees working for the Kansas City area employers remain enrolled in the more traditional preferred-provider organizations or point-of-service health plans.

Twenty percent of employees nationally are enrolled this year in consumer-directed health plans, as are 28 percent of Kansas City area employees who are getting employment-based coverage.

Across the country, membership in health maintenance organizations represents only a fraction of coverage. In the Kansas City area, HMO use was down to 8 percent of covered employees this year.

Looking ahead, Kansas City area employers in the Mercer survey said they expected to hold 2017 cost increases to 5.5 percent by making changes to their plan designs or their plan vendors. If they make no changes, they estimated their cost increases would be 8.5 percent.

Mark Whiting, a principal in Mercer's Kansas City office, said big cost increases for Affordable Care Act plans "aren't really affecting employer-based plans because employer plans get the good (health) risks in their plans as well as the bad risks...so, they're really two different animals."

Whiting said the relatively low cost increase in employer-based plans has much to do with directing employees to use "telemed" health counselors, retail health clinics, wellness programs and becoming more aware of "price transparency" so that workers understand the true costs of health care.

Meanwhile, a separate national survey by The Commonwealth Fund said that, compared with the five years leading up to the Affordable Care Act, premium growth generally has slowed for policies offered to employees by employers since 2010, when the act went into effect.

The report said 57 percent of the U.S. population under age 65 -- about 154 million people -- last year had health insurance coverage through their own jobs or those of family members.

"Contrary to early predictions that many employers would stop offering health insurance in response to the ACA's new coverage options, there has in fact been little change in the share of the nonelderly population covered by employer plans since the law went into effect in 2010," the Commonwealth report said.

The Commonwealth report said employees typically have had to contribute more to their health plans. Even though that contribution growth rate has slowed, the report said families are feeling pinched because income growth has failed to keep pace with rising premiums and deductibles.

In many parts of the country, "employee contributions to premiums and deductibles amounted to 10.1 percent of U.S. median income in 2015, compared to 6.5 percent in 2006," Commonwealth said.

Whiting, at Mercer, warned that no one should relax because the rising cost trend slowed this year.

"Don't let off the gas pedal," he said. "Health care costs still are going up twice the rate of salary increases, and pharmaceutical is still rising three times the rate of medical."

Diane Stafford: 816-234-4359, @kcstarstafford

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