Exclusive Article at EMRIndustry.com by Lindsey Patterson
According to a new study, employers continue to provide health insurance despite rising costs. On the contrary, the survey shows that slightly more employers are providing health insurance this year compared to last year.
Rising premiums
Health-insurance premium rates for employers are not rising as rapidly as the ones paid by those buying personal policies. However, with the rising costs, companies continue to face tough choices. As a matter of fact, the health insurance premium rates paid by customers who buy their own policies rose so steeply that, in Iowa, they complained about the hikes.
Having grown from $5,508 in 1999 to $15,743 in 2016, the average rate for a family plan health insurance provided by the employer is nearly triple what it was back then. Insurance carriers blame the increment not only on the use of health care medications and services but also on skyrocketing prices.
After surveying 1,025 employers, the annual survey overseen by David P. Lind found that the increment they faced concerning health-insurance premiums averages about 8% for 2016. To rein in the premiums, many employers adjusted their insurance plans in various ways such as through increasing the employees’ mandatory deductibles. On average, employers paid about 0.5% more for family plans and 6% for single-employee plans after the adjustments.
Obamacare is not to blame
Although many Obamacare critics blame this law’s regulations for the recent increase in insurance costs, the survey overseen by Lind shows that employers faced worse price shocks years before its enactment. David Lind’s study found that the sharpest average increase, estimated as 19%, came in 2002. According to this study, while the average total premium increased 64% in the five years before 2010 it was 49% in the five years after 2010.
However, the personal health-insurance market selling policies to those buying their own coverage experienced turnover in carriers and drastic price increments due to the Affordable Care Act. Much of the blame is placed on the transferred risk caused by the inability to deny individual policies to those with pre-existing health issues.
While the Affordable Care Act requires employers with over 50 full-time employees to provide health insurance or be penalized, Lind’s survey found that most were offering health insurance even before the rule took effect. He added that even the small employers exempted from the new requirement offer insurance to their workers.
Employers bear the burden
According to the Iowa Association of Business and Industry’s president, Mike Ralston, most employers consider health insurance an important benefit to offer. Since employers compete for employees, they know that the next shop will probably provide health insurance if they don’t, and their employees will most likely head over there. Ralston adds that although employers have continually carried the bulk of premium increments, there is a point past which it won’t be feasible. As such, employers cannot continue to shoulder this burden indefinitely.
While the average share of the overall cost has increased by 124% for employees, it rose by about 189% for employers. As a result, employees have recently had to pay a little bit more towards their health insurance, even though employers still carry most of the burden. The extra cost makes researching and comparing the rates offered by different insurance companies within your state significantly important. As overwhelming as it might seem, you can always get the best rates in all 50 states, regardless of the type of insurance cover you are interested in, by visiting Netquote.
According to Lynn Schreder, an insurance broker, although employers with less than 50 employees thought of dropping group plans, they thought better of it due to the skyrocketing premium rates their workers would face when buying individual coverage. She added that some employers might face steeper premium increases in 2018 because they will not be allowed to renew the policies purchased between 2010 and 2014. Maintaining the policies bought before 2010 should be possible unless they are no longer offered by carriers. She also added that unlike individuals, companies can deduct from their taxes whatever health insurance cost they incur, which is why many people still think the employer-based insurance market, which in truth is more stable, is not a bad deal.
