October 17, 2018
Employees’ Premiums Actually Dropped This Year and Nine Other Untold Employer Health Benefits Stories – Burda on Healthcare
Every picture tells a story. So does every chart in the Kaiser Family Foundation’s annual employer health benefits survey. Here are 10 small stories from Kaiser’s latest survey that collectively whisper to me that most employers aren’t that interested in doing something radical or exerting their purchasing power to provide better healthcare services to their employees at more affordable prices. The status quo won this round.
Kaiser released its 2018 Employer Health Benefits survey on Oct. 3 to well-deserved attention from everyone who follows this stuff. I think it’s the gold standard of employer benefit surveys because of its sample size, the consistency of its survey questions over the past 20 years and its methodology, which Kaiser makes very transparent.
As all good reporters know, if a company makes it hard to find out how many people took their survey that you’re writing about, something’s up. It’s like trying to find a media contact on a health insurance company’s website. You’ve never felt so unwelcome. It’s there, but they make you work for it.
But I digress. The big story, of course, from the survey was the eye-popping average annual premium for employer-sponsored health insurance for a family. It rose 4.5 percent (not 5 percent, I did the math) this year to $19,616. The average annual premium for single coverage rose 3.1 percent (not 3 percent, I did the math) this year to $6,896.
Below are 10 other things I pulled out of the 233-page survey report that didn’t get as much attention, if any, but should if you do care about this stuff. In no particular order:
1. Employee choice is limited
Eighty percent of the 2,160 employers surveyed for this year’s report offered their workers only one type of health plan. Take it or leave it. That’s it. And that’s roughly the same percentage that limited employee choice to one plan in 2017. If you look inside the numbers, you see that things are getting a little better at large firms, which Kaiser defines as those with 200 or more workers. The percentage of large companies that offered employees only one type of health plan dropped to 42 percent this year from 45 percent last year.
2. HMOs are making a comeback
Health maintenance organizations, which were industry darlings in the 1970s and 1980s then fell out of favor in the late 1990s, are back. Thirty-one percent of the companies in this year’s survey offer an HMO option to employees. That’s up from 17 percent last year. As provider organizations get bigger, they’re able to create their own HMOs and offer them directly to employers. Employees who sign up are limited to seeing hospitals and doctors in the HMOs, just like the old days. The spike in companies offering an HMO option is consistent with the need for companies to limit plan choices to control their costs.
3. Employees are paying less for coverage
Yes, it’s true. And that should have been the big story from this year’s survey. For single coverage, an employee paid $1,186, or 17.3 percent, of the average annual premium of $6,869 this year. Last year, the same employee paid $1,213, or 18.1 percent, of the average annual premium of $6,690. For family coverage, an employee paid $5,547, or 28.3 percent, of the average annual premium of $19,616 this year. Last year, the same employee paid $5,714, or 30.5 percent, of the average annual premium of $18,764. So workers didn’t pay more for less. They paid less for less. This is OK if you like HMOs.
4. Workers at large firms fared better
If you worked at a large firm, you paid smaller out-of-pocket premiums. If you had single coverage, your average annual out-of-pocket premium dropped 6.4 percent to $1,207. At small firms, which Kaiser defines as those with less than 200 employees, your premium for single coverage actually went up 10 percent to $1,133. If you had family coverage at a large firm, your average annual out-of-pocket premium decreased by 4.2 percent to $5,046. At small firms, your premium for family coverage dipped less than 1 percent to $6,781.
5. Employers tiering up on drug costs
As prescription drug costs rise, employers are adding more tiers, each with higher co-payments and deductibles. This year, 51 percent of employers had four or more tiers in their prescription drug benefits they offered to workers. That’s a big jump from 44 percent in last year’s survey. The average co-pay for a fourth-tier drug like a specialty medication was $105 this year compared with $11 for a first-tier drug like a simple generic. The average coinsurance for a fourth-tier drug was 31 percent compared with 19 percent for a first-tier drug.
6. Bye-bye retiree health benefits
I’m not sure what’s more surprising: that the percentage of companies offering retiree health benefits dropped to 18 percent this year from 25 percent last year; or, that 18 percent of companies still offer health benefits to their retired workers. I didn’t think that was still a thing. And if you were lucky enough to have them this year, here’s what companies did to control their spending on your benefits: increased retiree premium contribution (29 percent of respondents); increased cost sharing (20 percent); began offering benefits through a Medicare Advantage plan (8 percent); eliminated coverage for early retirees (3 percent); and eliminated coverage for Medicare-age retirees (3 percent).
7. Meh on prevention and wellness
When your company’s premiums are going up less than 5 percent a year by limiting employee choice, and your employees are spending less out of pocket for their coverage, why spend money on workplace wellness programs? That’s my read on some of the flat-lining numbers here. Thirty-eight percent of the firms this year offered workers an opportunity to complete a health risk assessment. That’s off from 39 percent last year. Twenty-two percent this year gave employees an opportunity to complete a biometric screening—the same percentage as last year. No harm, no foul, from the companies’ standpoint.
8. Not too discerning about providers
We can speculate on why later, but employers didn’t seem to care that much—or have little choice—of where their employee received their medical care. Only 14 percent of firms with 50 or more employees included a high-performance or tiered provider network to workers enrolled in their largest health plan option. Only 7 percent of all firms gave workers a choice of a narrow provider network to reduce costs. And only 2 percent of all firms eliminated a hospital from their network for cost or quality reasons.
9. But they liked telemedicine
Whether driven by cost or by employee preferences, more employers were into telemedicine. This year, 67 percent of firms with 50 or more workers included telemedicine as a covered benefit, and 39 percent of those offered a financial incentive for workers to use telemedicine. OK, it’s driven by cost. What was I thinking? Last year, 53 percent of firms with 50 or more workers included telemedicine as a covered benefit with 26 percent giving employees an incentive to see a telemedicine provider.
10. Wither private exchanges
Oh, and those private health insurance exchanges that everyone was so hot about a few years ago when the Patient Protection and Affordable Care Act created public health insurance exchanges? Not so hot. Only 3 percent of employees at companies with 50 or more workers this year got their coverage through a private exchange. That’s up a smidge from 2 percent in 2017. Why shop when you don’t have to, right?
“This year continues a period of stability and relatively low cost growth for employer-provided coverage,” Kaiser said in its conclusion on this year’s survey findings. “While premium growth continues to exceed increases in earnings and inflation, the differences are small compared to recent periods which, along with low underlying health spending growth, may help explain the apparent reluctance of employers and plans to make many changes in the market.”
Like they said.