Annual family premiums for employer-sponsored health insurance grew 5% to average $20,576 last year, according to new research from the Kaiser Family Foundation—the first time costs topped $20,000.
“It’s a real milestone to have passed $20,000 for a family’s premium for the year—and not a really great one,” Rabah Kamal, policy analyst at the Kaiser Family Foundation, said recently during an HRE webinar. “That’s like paying for a new car. And it’s not like buying it once; it’s like buying one every year.”
Employers and employees are sharing the cost. On average, workers contribute $6,015 toward the cost of family coverage, with employers paying the rest.
While average annual increases in premiums have been “relatively stable,” she says, rising inflation and stagnant salaries are making the healthcare increases even worse. These numbers were collected last fall before the coronavirus pandemic began, and some experts predict premiums will rise again this year.
“Family premiums for employer coverage have grown faster than workers’ wages, which clearly presents an affordability issue,” she said.
So how can employers improve the value of their health spending if they don’t want to reduce benefits? There are two areas to address: use of care and price of care.
For price of care, the primary options are to increase cost-sharing—clearly not employees’ favorite method—or to add wellness or health promotion plans, which can help get employees healthier, therefore saving employers money on healthcare costs in the long run.
As far as use of care, employers have more options. Some include reconfiguring provider networks by adding alternatives sites of care (such as opening an onsite clinic or adding telemedicine options); directing employees to more efficient providers; or restricting network breadth.
When asked during a webinar poll if and how they have reconfigured provider networks, attendees said they added alternative sites of care, tiered networks and Centers of Excellence. Fewer said they directly contracted with providers or eliminated providers.
“Overall, we’ve seen pretty modest uptick in several of these strategies because of barriers—including lack of information to make these changes or lack of awareness or bandwidth,” Kamal said. “There are also concerns over employees’ potential reactions to changes and provider options. But we’re hoping [this kind of data] can generate conversations about what other employers are doing.”