Little relief for workers in health spending trends

Record low healthcare inflation does not seem to be trickling down to average middle income consumers with work-based insurance. If anything, more Americans may be questioning the value of their employer health plans amid wage stagnation.

Premiums for employer-sponsored health insurance have increased on average 4.1 percent in the post-Affordable Care Act era, 2010-2013, according to new research by the Commonwealth Fund.

That's a modest decline from most of the previous decade when premiums increased 5.1 percent. But considering that average incomes have grown so slowly, workers are spending more on health insurance, even as deductibles and cost-sharing increase, argues Commonwealth Fund researchers, who analyzed data from the Medical Expenditure Panel Survey and the Census Bureau's Current Population Survey.

"As employers struggle to keep health insurance premium costs manageable, they are asking their workers to pay a larger share of their insurance costs," said Commonwealth Fund president David Blumenthal, MD.

"The recent slowdowns in overall healthcare costs are promising, but clearly they have not translated into relief for workers, who are spending more of their incomes on health coverage," said Blumenthal.

Since 2003, premium increases have vastly exceeded income growth, Blumenthal noted. Average group health plan premiums rose 60 percent between 2003 and 2013, while incomes grew only 11 percent -- and employee premium contributions increased 93 percent.

Since healthcare benefits are part of overall compensation and employers have contributed to premium increases, it might be possible to peg compensation growth at higher than 11 percent. But considering that the employer-sponsored insurance model leaves workers with little in the way of meaningful choice in carriers, benefits or cost tiers, the increase in employee premium and deductible costs seems like a real burden for the average middle-class American.

_{(Source: Commonwealth Fund)}

Average total premiums for family coverage, including both the employer and employee contributions, reached $16,029 last year -- 23 percent of median family income, an increase from 15 percent in 2003, according to the study. For employee-only coverage, premiums cost 4 percent of median income, compared to 2 percent in 2003.

Healthcare costs "are still growing faster than median income, and more clearly needs to be done to keep health insurance affordable for U.S. families," said Sara Collins, Commonwealth Fund vice president for coverage and access and the study's lead author

While employees are paying more in premiums, the rate of premium growth is slowing, and as Collins said, there is a palpable sense that middle income earners cannot be asked to keep paying more in premiums year after year.

And employer premiums have slowed, the report noted, consistent with trends in the public exchanges, thanks to risk-sharing programs, competition, tiered networks and balanced risk pools. But, Collins and colleagues offer in caveat: "It is not yet clear whether moderate premium growth will continue."

Other factors that may help make premiums more affordable are private exchanges that give employees more choice -- for those who are low-utilizers -- and transparency efforts both at the health plan and provider level that make actual comparison shopping for high-deductible health plan members possible.

But in any case, the employer-sponsored insurance market is shrinking, while the markets for individual and Medicare Advantage plans are growing. All that's standing in the way of a national individual market is the historic employer-based insurance tax exemption and the ACA's employer mandate.