Annual family premiums for employer-sponsored health insurance increased by 3% on average to $18,764 in 2017. It’s the sixth straight year of “relatively modest increases,” according to the Kaiser Family Foundation (KFF)/Health Research & Educational Trust 2017 Employer Health Benefits Survey.
The report found that employees at small companies pay an average of $1,550 more annually for health insurance for family coverage than large businesses.
Small businesses offering health insurance has dropped from 59% in 2012 to 50% in 2017.
The ACA exchanges receive most of the press coverage because of their connection to the ACA and their hefty annual premium increases, but the employer-based market remains the biggest insurance source in the U.S.
Employer-based insurance plan premiums have increased slowly over the past decade. The report said the average family premiums on employer-based plans have increased 19% since 2012, which is slower than the previous five years (30%) and the five years before that (51% from 2002 to 2007). The 19% average family premium increase over the last five years is nearly equal to one year of ACA increases.
Though the employer-based market is largely stable, fewer small businesses are offering health insurance than five years ago. Small businesses offering health insurance has dropped from 59% 2012 to 50% in 2017. The top reason small businesses don’t provide health insurance is that the costs are too high, according to the report.
Small businesses that still provide insurance are offering employee plans with higher deductibles, which means employees are paying more out-of-pocket than employees at large companies. For instance, workers covered by PPOs at small firms have an average aggregate family deductible of $3,660, which is nearly double the average at large companies. Only 16% of those businesses provide money to employees to purchase health insurance on their own in the individual market or through the Affordable Care Act exchanges.
All of this means that employees at small businesses are shouldering more of the healthcare costs. Plus, although premium rates aren't skyrocketing, employees are paying more out-of-pocket costs and facing higher deductibles.
Hospitals and health systems often feel the pain of high-deductible plans and consumer cost sharing. These plans can lead to more bad debt when individuals can’t pay their medical bills. It also requires hospitals to chase down individuals rather than working with payers, which is more administrative work for hospitals.
A recent HealthFirst Financial Patient Survey found that out-of-pocket medical bills are worrying people with many concerned that they can’t afford even relatively small medical bills. More than 40% of respondents of the survey said they are “very concerned” or “concerned" about their ability to pay out-of-medical bills over the next two years. More than half of those surveyed said they are worried that they might not be able to afford a $1,000 bill, 35% were concerned about a $500 bill and 16% said they’re worried about paying a bill less than $250.
This is troubling given that out-of-pocket limits are $7,150 for an individual plan and $14,300 for a family plan and plan deductibles often exceed $3,000. So, it's true premiums aren't increasing as they were a decade ago, but that hasn't helped people facing hospital bills and high deductibles.