Healthcare Premium Growth Slows While Deductibles Rise
Annual family premiums for employer-sponsored health insurance rose an average of three percent to $18,142 this year, a modest increase at a time when workers’ wages (2.5 percent) and inflation (1.1 percent) also grew modestly, according to the Kaiser Family Foundation/Health Research & Educational Trust’s 2016 Employer Health Benefits Survey. Workers on average contribute $5,277 annually toward their family premiums.
The low family premium increase this year is similar to the four-percent increase observed last year and reflects a significant slowdown over the past 15 years. Since 2011, average family premiums have increased 20 percent, more slowly than the previous five years (31 percent increase from 2006 and 2011) and more slowly than the five years before that (63 percent from 2001 to 2006).
“We’re seeing premiums rising at historically slow rates, which helps workers and employers alike, but it’s made possible in part by the more rapid rise in the deductibles workers must pay,” says KFF President and CEO Drew Altman.
The trend observed in HRET’s findings in part reflects covered workers moving into high-deductible plans compatible with Health Savings Accounts (HSAs) or tied to Health Reimbursement Arrangements (HRAs). These plans have lower average premiums than other plan types. In 2016, 29 percent of all workers were in such plans, up from 20 percent in 2014, while a shrinking share of workers (48 percent in 2016, down from 58 percent in 2014) are enrolled in Preferred Provider Organization (PPO) plans, which have higher-than-average premiums. These shifts effectively reduced the average premium increase by half a percentage point in each of the past two years.
The 18th annual survey is a joint project of the Kaiser Family Foundation and the Health Research & Educational Trust. The survey was conducted between January and June of 2016 and included 3,110 randomly selected, non-federal public and private firms with three or more employees (including 1,933 that responded to the full survey and 1,177 others that responded to a single question about offering coverage).
Click here for more on the survey’s findings.