The 2017 United Benefit Advisors Health Plan Survey, an annual benchmarking report on US employer-sponsored health insurance plans, shows premium renewal rates (the comparison of similar plan rates year over year) for employer plans rising 6.6 percent over last year, significantly above the five-year average increase of 5.6 percent. The highest premium increases were seen in Connecticut (24 percent) and New York (14 percent), but some states actually saw premiums fall, such as Washington state, where they dropped by 10 percent.
Overall, the survey points to a spike in employee health insurance costs throughout the country, while employees are bearing a larger share of the costs:
Average employee premiums for all employer-sponsored plans rose from $509 in 2016 for single coverage to $532 in 2017 and from $1,236 to $1,272 for family coverage (a 4.5% and 3% increase respectively). Average annual total costs per employee increased from $9,727 to $9,935. However, the employee share of total costs rose 5% from $3,378 to $3,550, while the employer’s share rose less than 1%, from $6,350 to $6,401.
The survey, which focuses on small and mid-size employers, also registered a notable increase in the number of these companies pursuing self-funded health care. UBA President Peter Weber comments on the reason for this:
“Self-funding has always been an attractive option for large groups, but we see self-funding becoming increasingly desirable to all employers as a way to avoid various cost and compliance aspects of health care reform,” says Weber. “For small employers with healthy populations, self-funding may be particularly attractive since fully insured community-rated plans under the ACA don’t give them any credit for a healthy group.”
Smaller organizations are being more frequently urged to consider self-funded or value-based care plans instead of relying on traditional health insurance at a time of significant uncertainty around the future of the Affordable Care Act and US health care policy in general.
As health care costs continue to rise, HR leaders will face the challenge of controlling health care costs without shifting so much cost onto employees that the benefit is no longer attractive. To meet this challenge, Brian Marcotte, president and CEO of the National Business Group on Health, recommends to SHRM’s Stephen Miller that HR form alliances with other parts of the organization:
“For most organizations today, HR has to be joined at the hip with finance,” he noted. When meeting with the CEO and leadership team, including the CFO and general counsel (and, in corporations, with the head of procurement), “you want to go in and be aligned with all of the stakeholders. Having already brought them up to speed on what you’re presenting to the CEO is critically important to getting out of that room with a green light on your strategy.”
He advised showing business leaders how to achieve the cost trend number that the CEO says is the bottom line given the level of business growth (or lack of growth in a down cycle, when the corporate budget has to be flat or down). “If the [health care cost increase] trend is 6 percent and your CEO doesn’t want [the company to absorb] any more than 3 percent, you’ve got to meet that expectation,” Marcotte said. “Show them all the things you’re going to do to achieve that number, presented as a business plan” aligned with the organization’s priorities.