In sharp contrast to the soaring health insurance premiums in many Affordable Care Act marketplaces, the cost of coverage for the vast numbers of people who get insurance through their jobs rose relatively little this year, continuing a period of remarkable stability in the employer market, according to a national survey released Tuesday.
The annual premium for family coverage rose an average of 3 percent to $18,764 this year, according the Kaiser Family Foundation, a nonprofit group, which conducted the annual survey of employers. That is the sixth straight year that employer-provided policies have increased by well under 5 percent, according to the survey. Employers paid the bulk of the costs, the survey found, with workers shouldering an average of $5,714, a year for a family policy.
About 151 million people are covered through an employer, and the insurance environment for many of those companies is characterized by “a remarkable stubborn stability,” said Craig Garthwaite, a health economist at the Kellogg School of Management at Northwestern University.
The exception is the smallest companies, which are still finding it challenging to afford insurance for their workers. In recent years, a growing number of smaller companies have stopped providing health benefits, according to the Kaiser data. Over the last five years, the percentage of businesses with under 50 workers offering coverage has fallen from 59 percent to 50 percent. In 2001, two thirds of those employers offered benefits.
Health costs remain an issue even for families with stable employer coverage. This year’s modest rise still outpaces both overall inflation and the increase in workers’ earnings. “The sticker shock for people is still very real,” said Drew Altman, the Kaiser foundation’s chief executive.
But it is a calm environment compared to the marketplaces where individuals shop for coverage under the Affordable Care Act. While fewer than 20 million Americans buy their own insurance, the tribulations of the individual market have captured most of the public’s attention. The average cost of a benchmark plan in the individual market rose 20 percent this year, according to Kaiser, as insurers tried to stem their losses.
The combination of political uncertainty over the future of the health law and insurer unrest may result in a similar jump in individual premiums for 2018. Insurers must make their final decisions where to sell and what to charge in the Affordable Care Act marketplaces by the end of the month.
Early results from another employer survey, conducted by Mercer, a benefits consultant, indicate that businesses expected to see health benefit costs increase 4.3 percent for 2018 after making changes like switching insurers or raising plan deductibles. “Our take away from this is that the trend for employers remains stable, and it remains low,” said Tracy Watts, a senior partner at Mercer.
As a result, employers may not feel the need to make any drastic changes. “What I see in our renewals is very predictable and very steady,” said Lisa Trombley, benefits manager for Kelly Services, the Troy, Mich., staffing company.
Overall, health care costs have increased at historically low rates in recent years, said Matthew Fiedler, a health economist at the Brookings Institution. “We’ve got lots of indicators, across a constellation, that the health care trend is pretty low,” he said.
While employers credit their efforts to slow down costs, others, including Mr. Fiedler, say some of the changes enacted under the Affordable Care Act have also contributed. The federal law reduced what Medicare pays for care, which allows private payers to strike better bargains, he said, and the government has been encouraging experiments in how to pay doctors and hospitals in new ways that may reduce spending.
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