Employer Coverage

Employers provided insurance for approximately 152 million non-elderly US adults in 2018, covering more than 50% of the population (Kaiser Family Foundation (KFF) Employer Health Benefits 2018 Annual Survey). This year marks the 20th anniversary of the survey of private and non-federal public employers with 3+ workers. Unless noted, the statistics cited throughout this blog are attributed to the survey.

Some notable statistics about employer insurance coverage in 2018:

• 61% of covered workers were enrolled in plans that were either partially or completely self-insured
• 57% of employers offered health benefits to at least some of their workers:
• 90% of employees worked for companies offering at least some level of insurance
• 99% of large firms and 97% of small firms offered coverage to spouses
• 100% of large firms and 97% of small firms offered coverage to dependents

Types of Plans Offered

Types of plans employees enrolled in varied across the country. PPOs remained the most popular, with 49% of covered workers choosing this type of plan. Figure 1 provides the enrollment breakdown by plan type in 2018.

Cost Sharing

Like in past years, employees were responsible for paying part of their own or their families’ healthcare expenses.

Annual Premiums
Average premium costs varied by region of the country, industry, size, and type of businesses that offered employee coverage. Workers in the Northeast paid higher premiums for single and family coverage, while those in the south experienced relatively low family premiums. On average, covered workers contributed:

• 18% of the premium for single coverage
• 29% of the premium for family coverage

It was no surprise that premiums increased last year. Over the past decade, workers experienced a 55% increase in family coverage. In 2018, the average annual premiums were:

• $6,896 for single coverage (18% of total costs)
• $19,616 for family coverage (29% of total costs)

Premiums were less for those enrolled in high deductible health plans:

• $6,459 for single coverage
• $18,602 for family coverage

But high deductible health plans may not save employers in the long run. Some studies have suggested that healthcare service utilization decreased when employees and their families faced the high out-of-pocket costs associated with many high deductible health plans.

Read colleague Brandon Conroy’s blog, Health Spending as it Relates to Income

Figure 3 shows the breakdown of premium costs by plan and enrollment type.

Deductibles

Most employees (85%) were required to meet an annual deductible before the plan picked up the tab (see Figure 4). Employees responsible for meeting deductibles in 2018 paid, on average:

• $1,573 for single coverage
• $2,132 for family coverage for workers in small firms
• $1,355 for family coverage for workers at large firms

Copayments

Many covered employees were also responsible for copayments and coinsurance (see Figure 5).

Out-of-Pocket Maximums

There was some good news: 99% of covered workers were protected by out-of-pocket maximums, which established in-network cost sharing thresholds for single coverage. But those limits also varied:

• 14% have an out-of-pocket maximum of less than $2,000
• 20% have an out-of-pocket maximum of $6,000+

Inflation and Healthcare Costs Outpaced Compensation

It’s worth noting again that workers experienced a 55% increase in family coverage between 2008-2012. In 2018 alone, the average premium increased:

• 3% for singles
• 5% for families

Wages increased an average of 2.6%, which was virtually offset by the 2.5% increase in inflation (see Figure 6).

US Healthcare is the Most Expensive in the World

According to a recent study by the Institute for Health Metrics and Evaluation at the University of Washington:

• The average inpatient stay cost was $22,000+
• The average outpatient office visit cost was nearly $500

Employers and employees are paying more and more for healthcare.

Cost Control Measures

Even with the dire numbers, employers and health plans have made an impact on the medical trend, reducing it to 5-5.7% a year over the past 5 years (Medical cost trend: Behind the numbers 2019, PWC). Some programs have been successful, including those that accomplish the following :

• Improving health by Identifying health issues, eliminating unhealthy behaviors, and managing chronic conditions
• Making care more accessible
• Managing provider networks

Improving Health

Employers offered 3 types of programs aimed at improving overall employee health:

Making Care More Accessible

Many large employers that offered benefits in 2018 covered care provided in alternative settings, increasing member accessibility to services. Employer also saved money from care provided in less costly settings than traditional sites of care.

Managing Provider Networks

A percentage of large employers offering health insurance in 2018 began or continued the following measures to better manage their provider networks:

• High performance or tiered networks: 17%
• Narrow networks: 5%
• Eliminated hospitals or health systems from their provider network: 3%

The chart below summarizes the cost controlling measures large employers took in 2018:

How Do You Compare?

Whether you’re a large firm or small, located in the east or in the west, the statistics I’ve provided can help you assess how your programs compare to your peers, at least at a very high level.

• If you’re offering more than most employers, you need to understand why that is. Is that part of your competitive strategy or a reflection of the location or industry you are in?
• If you’re offering less coverage, that could be causing recruitment and retention issues.

Benchmarking is a step in the right direction. But to get true insight into how your programs compare and identify cost savings opportunities such as site of care redirection, you need to integrate data across your human capital programs. At the very least, you need to understand the correlation between medical and pharmacy costs, two of your biggest benefits program cost drivers.

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