While all eyes were on D.C. last week as the House of Representatives initiated its impeachment inquiry about President Trump’s dealings with the Ukraine, an important study was released that deserves attention: the Kaiser Family Foundation 2019 Benchmark Employer Health Benefits Survey.
KFF has been conducting this survey annually for 21 years. It is based on interviews with a cross section of public and private sector organizations stratified by industry, size and region. This year, 2012 interviews were conducted. Its key findings include:
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In 2019 the average annual premium for single coverage rose 4% to $7,188, and the average annual premium for family coverage rose 5% to $20,576. (In the same time period, employee wages increased 3.4% and inflation increased 2%).
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The average premium for family coverage has increased 22% over the last five years and 54% over the last ten years, significantly more than either workers’ wages or inflation.
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Covered workers contributed 18% ($1,242) of the cost for single coverage and 30% ($6,015) of the cost for family coverage, on average, with considerable variation across firms.
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31% of covered workers in small firms are in a plan where the employer pays the entire premium for single coverage, compared to only 5% of covered workers in large firms. In contrast, 35% of covered workers in small firms are in a plan where they must contribute more than one-half of the premium for family coverage, compared to 6% of covered workers in large firms.
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57% of firms offered health benefits to at least some of their workers. While some larger firms reported that take-up dropped because of the elimination of the individual mandate penalty, the overall share of workers covered at their own firm (61%) was similar to that in recent years.
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28% of all covered workers and 45% of those in small companies have high deductible plans with a $2,000 or higher deductible requirement. Both are significant increases from 2009 when 7% in all companies and16% of small company workers had $2,000 deductible requirements.
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And the number of employers providing health benefits is decreasing, especially among small employers:
MY TAKE
The KFF survey results are substantive notwithstanding the potential that its methodology might under-weight the views and activities of organizations with more than 5000 employees. Nonetheless, it provides an important longitudinal perspective about how companies are changing their benefits strategies to attract, keep and optimize the performance of their workforces.
Employers play a key role in healthcare. Their insurance plans cover almost half (49%) of the entire population and contribute almost 90% of the operating margin in most hospitals. Since 1943, their costs associated with employer-sponsored health benefits has been treated as a tax deduction to the company, prompting many to use these benefits in lieu of wage increases in their workforce plans.
What has their attention now is health costs that are forecast to increase at least 5.5% annually for the next decade. What they’re sensing is that the health system—doctors, drug makers, hospitals, insurers—is ill-prepared to address their concern.
They believe our costs are indefensible, much that’s done is necessary, prices are inaccessible, and care is fragmented and uncoordinated. They blame hospitals, drug companies and doctors for waste and see political inaction as complicit.
They are impatient: smaller companies are dropping benefits altogether betting they can attract their workforce through other means. The rest, especially bigger employers like Haven (Amazon, Berkshire Hathaway, JPMorgan) and others are going further.
Studies by PwC, Pew, Deloitte and others paint a similar picture to these KFF survey results: employers are taking healthcare matters into their own hands. Big companies still provide rich benefits; smaller companies don’t. And all are frustrated by health costs and receptive to solutions from fresh players.
For policymakers, the role of employer-sponsored health benefits needs fresh attention: companies that provide insurance to their employees should not be expected to underwrite the costs of care for those lacking coverage or in plans like Medicare and Medicaid that reimburse less than costs. And companies that do not provide health insurance, or those that provide coverage that’s unaffordable to their employees, should contribute funding that’s on par with the needs of their employee population.
How the system responds to employer-sponsored health benefits is likely its biggest short-term challenge. The latest KFF survey shows increasing numbers of employers unwilling to place bets on the status quo.
Paul
P.S. This week, Congress is back home for a two-week recess, so much of the activity will be elsewhere.
WHAT TO WATCH FOR
Medical Marijuana: Momentum is growing. Support for legalization has doubled since 2010, and currently, 62% of US adults support marijuana use.1 Although marijuana is still classified as a schedule I drug at the federal level, as of June 2019, 33 states and the District of Columbia have legalized 1 or more forms of marijuana; 11 states and the District of Columbia have approved marijuana for both medical and recreational uses.2 In the meantime, current (past-month) marijuana use has increased from 6.2% in 2002 to 9.6% in 2017 among persons aged 12 years or older in the United States.3 In 2017, 24.4 million US adults aged 18 years or older were current users of marijuana; young adults aged 18 to 25 years had the highest prevalence (22.7%).3Among respondents with medical conditions, 11.2% of young adults reported using marijuana on a daily basis, and the prevalence of marijuana use decreased with increasing age. Among those with medical conditions, the prevalence of marijuana use decreased with increasing age, ranging from 25.2% for those aged 18 to 24 years to 2.4% for those aged 65 years or older for current marijuana use and from 11.2% to 0.9% respectively, for daily marijuana use. Dai et al A National Survey of Marijuana Use Among US Adults With Medical Conditions, 2016-2017JAMA Netw Open. 2019;2(9):e1911936. doi:10.1001/jamanetworkopen.2019.11936
Democratic Debate #4 in Ohio: On October 15 and 16, 12 of the 19 still in the running for the Democratic nomination will square off at Otterbein University in Westerville Ohio. A Morning Consult Poll conducted September 13-15 after Debate #3 said voters want more specifics about the candidates’ health care plans: Morning Consult polled 533 voters who watched the Houston debate. It found a 47 % want to hear how candidates’ healthcare plans will affect their copays and deductibles or prescription drug prices,9% said they wanted to hear more about the role for private insurers and 7% want to hear more about changes in national health expenditures,
RESOURCES
Claxton et al “Health Benefits In 2019: Premiums Inch Higher, Employers Respond To Federal Policy” Health Affairs September 25, 2019 HTTPS://DOI.ORG/10.1377/HLTHAFF.2019.01026
