Employer health insurance premiums increased 4 percent for families, 5 percent for singles this year. While that’s a modest increase, over the last decade, family premiums are up 80 percent.
And, premiums have been held down of late in large part due to rapidly increasing cost-sharing; the average deductible for employers with 3-199 employees hit $1715 this year as the percentage of employers with deductibles over $1000 jumped from 49% in 2012 to 58% this year.
Large insurers’ actual trend rates continue to come in lower than projections, with the latest stats indicate Aetna, CIGNA, and Wellpoint all reporting mid-single digit rises.
Combining Medicare and commercial health care costs as reported by health care providers shows an increase of 3 percent in June over the preceding 12 months. Medicare’s trend was a lowly 1.27 percent…Medicare is increasing hospital reimbursement by less than 1 percent, a move that will certainly help keep the program’s costs increasing very slowly.
But those price controls are far from the only reason Medicare’s cost trends are at historical lows.
What’s behind the relatively good news on cost increases? While commercial insurers see the recession as a contributor to past success in keeping trend rates down, the recession doesn’t appear to have had much to do with Medicare’s relatively low cost increases from 2000 to 2010. According to the Congressional Budget Office, the modest trend rate:
“appears to have been caused in substantial part by factors that were not related to the recession’s effect on beneficiaries’ demand for services…other factors–namely, a combination of changes in providers’ behavior and changes in beneficiaries’ demand for care that we did not measure–were responsible for a substantial portion of the slowdown in Medicare spending growth.”
So, what does this all mean.
Well, mostly good news for folks not in the health care sector. The decline in projected costs will have a substantial – and very positive – effect on the Federal deficit and long-term debt.
Employers and individuals won’t see costs hit the troposphere just yet – I guess that’s good news, although they certainly aren’t going to drop out of the stratosphere…
For the health care provider sector (broadly defined), what have been wrenching changes to date are about to get even more dramatic. I’d expect some payers will see increased efforts to cost-shift as providers seek to increase revenues where they can while they struggle to strip cost and inefficiencies out of their operations.
While insurance premiums may not be increasing as much, actual coverage seems to be substantially declining which might save employers money. Looks like some employers are implementing high deductible plans which cover nothing until a family has met their deductible – $3000+, and then only a percentage of healthcare/ prescriptions will be covered, but a family must pay $9000+ out of pocket before being fully covered. Employers suggest that people love these types of plans and how it gives people more control over their healthcare. However, in reality, this will significantly hurt families with chronic illnesses who will be hit with enormous expenses at the start of the new year. No more co-pays for scripts, DME, labs, doc/specialist visits – just full price. Not good.