Good News for Small Business Owners: Employee Insurance Premiums Have Not Increased Much
September 15, 2014
In the aftermath of the Affordable Care Act (ACT), which is also colloquially known as "Obamacare," many small business owners and potential small business owners have been deeply concerned about the cost of employee health insurance. However, there is good news that should help calm some of those concerns. The cost of employee health care premiums is growing at a slower rate than it did before the ACA became law.The Kaiser Family Foundation Report
The New York Times reports that the Kaiser Family Foundation published its annual survey this week on health plans that employers nationwide are offering to employees. According to the Times, the Kaiser survey is generally considered the most reliable measure of what is happening in the employer health care market. The Kaiser Family Foundation has existed since 1948, and was revamped in 1991 with a goal of providing trustworthy information about health care not biased by the large number of stakeholders who may have personal or professional agendas. This is the sixteenth year that the foundation has published a study like this one. The study's big finding was that "growth in health insurance premiums was only three percent between 2013 and 2014." This is the lowest that growth rate has ever been in those 16 years (although at least one of those other years tied the 3% growth rate). Typically, the growth in the premiums employers pay for their employees' health insurance has been in the double digits, making this extremely low number even more encouraging.
Experts do not agree on one single cause of the slowed premium growth. However, many economists specializing in healthcare think that the state of the economy combined with shifts in medical practice have contributed substantially to the decreased growth of costs. Medical practitioners have moved away from expensive hospitalizations and drugs, at least to some degree. Since 2009, health care costs in general have been increasing at an annual rate of about 3%, and more people have health insurance through employment than through any other source. So if the overall growth rate in health care costs is low, it makes sense that the growth rate of employer premiums would eventually drop as well.Not All Good News–Employee Deductibles are Increasing Dramatically
While the growth of your direct costs for your employees' insurance premiums is slowing, not all of the news is good. Employees' deductibles related to that insurance are increasing. According to the Los Angeles Times, the "average employee deductible has increased 47% since 2009 to $1,217 annually." Furthermore, almost one out of five workers face a deductible of at least $2,000. While the ACA requires that the insurance cover basic preventative care, should an employee fall ill the employee may avoid getting treatment even with insurance because he or she does not have the ability to pay the deductible. This could lead to sick employees delaying care, becoming more ill, and ultimately missing more work. Missed work decreases productivity and could affect the business's bottom line, so it should be a concern for the employer as much as it is a concern of the employee.