New research released today shows that for all of 2015, plan premiums for employer-sponsored health coverage continue to be stable. According to the KFF survey, the average 2015 premium for employer-based family coverage grew 4.2 percent. Research shows that since 1999, the last four years actually account for four of the five lowest growth rates. And, this slow growth is expected to continue into 2016.
Researchers believe that this slower growth reflects lower per-enrollee health care costs, including those for Medicare beneficiaries. These lower costs are due to the passing of the Affordable Care Act (ACA). This law has greatly increased plan enrollment, which has increased healthcare spending.
These savings are benefiting the U.S. economy, and particularly, American workers. Employees have generally been rewarded with lower premium contributions. And as employers are spending less on these premiums, total compensation costs are reduced. This, in turn, has increased job growth. Many experts believe that eventually, these savings will be passed on to workers as higher wages.
Maximizing the healthcare law’s benefits
The study suggests that specific steps are necessary to maintain long-term employment benefits. One key measure is ensuring that all of the ACA’s tools and provisions are properly utilized, including:
- Moving our healthcare system toward new payment models. Today, the standard is “fee-for-service” payment systems. This involves doctors and hospitals being paid based on the quantity of care provided, rather than the patients’ outcomes achieved. But new payment models could: reward quality and efficiency; promote substantial improvements in care; and extend the slow growth in health costs.
- Ensuring that the federal Health Insurance Marketplace remains transparent and competitive
- Implementing the ACA’s tax provision for more efficient, high-cost employer plans
The Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) found that growth in per-enrollee spending in Medicare is projected to increase by only 1 percent in 2015. For the sixth consecutive year, Medicare spending per beneficiary will be very similar to the overall rate of inflation. But faster growth has been observed in the three largest categories of healthcare goods and services: hospital services, ambulatory services and prescription drugs.
For workers, one benefit of the Affordable Care Act has been the provision that all non-grandfathered health insurance plans place a limit on total annual out-of-pocket spending. As of 2010, 18 percent of workers enrolled in single coverage lacked this protection. But thanks to the ACA, only 2 percent of workers in single coverage lacked this protection in 2015. Studies also show that deductibles for employer-provided coverage have generally been rising for more than a decade; this should apply to 2015, as well.
It’s thought that the Great Recession (2007-2009) played a part in today’s slower healthcare growth. However, the subsequent economic recovery has resulted in 13.1 million new private sector jobs over the past 66 months of job growth. Unemployment levels have also decreased to levels last seen in the spring of 2008, before the worst effects were felt. As such, today’s improvements – including the slower growth — are probably due to structural changes in the healthcare system.