Health Premiums Growing Faster than Income

Single Employee Insurance Up 48% from 2005-2014

It’s no surprise to employers that health premiums continue to take a bigger spending bite every year. Single employee premiums jumped 48% from 2005 to 2014, reported the Congressional Budget Office (CBO) in February 2016.[i] Estimates at 5% annual growth mean that the cost of insuring employees will outpace average income per capita by two percentage points per year.

health expenses, healthcare costs, employer premiums

Source: CBO with data from 2015 Employer Health Benefits Survey (Kaiser Family Foundation) & Agency for Healthcare Research & Quality

The CBO projects average premiums for employer-based coverage at $10,000 for individuals and about $24,500 for family coverage in 2025—an almost 60% increase from 2016.

Costs for government subsidized health insurance will top $600 billion this year. And most Americans who receive subsidies are working full-time. The Affordable Care Act (ACA) will account for $110 billion in subsidies.

Looming over employers is the Cadillac tax on more expensive health care insurance. Currently the 40% tax is set to take effect in 2020 (see “Cadillac Tax Revisions” blog), but ACA requirements are impacting employer planning for health benefits.

Since an average 62% of American employees still get their health coverage at work, tracking health care spending remains a major concern for businesses.[i]health premiums, healthcare costs, employer health expenses

As health care laws continue to change, employers must work closely with consultants and benefits administrators who have expert knowledge to get the best performance from every health care dollar.

[i] “Update from 2015 Employer Health Benefits Survey,” Kaiser Family Foundation, February 5, 2016, http://kff.org/private-insurance/issue-brief/a-comparison-of-the-availability-and-cost-of-coverage-for-workers-in-small-firms-and-large-firms-update-from-the-2015-employer-health-benefits-survey/ (accessed April 28, 2016)

[i] “Private Health Insurance Premiums and Federal Policy,” Congressional Budget Office, February 11, 2016, https://www.cbo.gov/publication/51130 (accessed April 4, 2016).

 

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