Soaring grocery bills and car prices have subsided, but the relief in prices for Americans has not extended to health care, a new study shows.
The average cost of a family health insurance plan offered through an employer rose 7% this year to $25,572, according to the annual Employer Health Benefits Survey released Wednesday by KFF, a nonprofit health policy organization. It became.
The cost of family health insurance rose 7% for the second year in a row, after a decade of modest annual increases. Family insurance premium rates increased by just 1% in 2022.
Individual premiums rose 6% this year to $8,951, according to the survey. A year ago, personal plans grew by 7%.
These rising health insurance premiums also put a strain on businesses, which pay the bulk of health insurance premiums, and on families, many of whom struggle to pay rent and groceries. The increase in health insurance premiums outpaced the 4.5% increase in wages for workers and the 3.2% increase in inflation, which has subsided after spiking in 2021 and 2022.
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Approximately 154 million working-age Americans and their families have health insurance coverage through their workplaces. KFF tracks employer health insurance trends through an annual survey of 2,142 non-federal and private employers nationwide.
Matthew Ray, associate director of KFF’s Health Markets Project, said the acceleration in health insurance premium rates after a decade of modest increases likely reflects “economy-wide price increases.” said. Ray also said people are accessing health care more frequently because they have neglected doctor visits and regular health checkups during the COVID-19 pandemic.
“It’s back to normal levels,” Ray said.
Tim Nimmer, senior vice president of insurance services and operations at TriNet, which provides staffing services to small and medium-sized businesses, said health care inflation tends to lag overall inflation, and as overall inflation slows, health insurance prices will decline. He said this is one of the reasons for the rise.
When will I know my health insurance premium?
Consumers will see higher prices when employers begin offering 2025 health insurance plans in the coming weeks. That means expanding payroll deductions at a time when many families are struggling due to the overall rising cost of living.
Research shows that employers are trying to limit the amount of health insurance increases they pass on to employees.
The average cost of health insurance for families has jumped 24% since 2019, but payroll deductions for workers have increased by just 5% over the same period. Most of these costs are covered by the employer. The average cost of a family plan this year was $25,572, with companies spending $19,276 and employees contributing $6,296 through payroll deductions, the study found.
The average out-of-pocket expense for individuals this year was $1,787, an increase of just $52 from a year ago, according to the survey. A deductible is the amount a consumer must pay out-of-pocket before the bulk of the insurance begins.
The premiums companies pay are based on the employee’s medical expenses for hospitalization, doctors, prescription drugs, and other medical services.
Some employers try to contain these costs by excluding more expensive hospitals and other health care providers from their insurance plans’ networks. Employees and their families pay negotiated lower rates to visit hospitals and doctors within its network.
The study found that nearly one in five companies with 5,000 or more employees has a “narrow network” of hospitals, doctors and other health care providers.
Yet, many small businesses struggle to find ways to limit skyrocketing healthcare costs.
Health insurance premiums at Epting Distributors, a small business that sells heating and air conditioning systems in South Carolina, have increased nearly 30% this year, said Laura Ivey, the company’s human resources and payroll coordinator.
Epting pays health insurance for about 130 employees, many of whom are elderly and grappling with chronic conditions such as obesity, diabetes and heart disease. Ivey said some are likely eligible for Medicare, the federal health care program for people 65 and older, but are choosing to continue with their company’s health insurance. Medicare-eligible employees may choose to remain enrolled in a workplace insurance plan, but doing so imposes a burden on the employer.
Ivey is frustrated by the lack of transparency from health insurance companies and providers about the cost of medical services. With this information, she said, workers can be advised to choose lower-cost options, such as getting X-rays or blood tests at an outpatient center rather than a hospital.
Hospitals must make some of their pricing information available to the public. A federal rule that went into effect in 2021 requires hospitals to post the cash prices and charges they negotiate with health insurance companies for a broad list of procedures in a computer-readable format so the information can be analyzed.
But Ivey said transparency has helped the company cut costs, in part because companies and consumers need special programs on powerful computers to release price data. He said he had not.
“I don’t have access to it at all. I tried,” Ivey said.
The American Hospital Association, an industry group, said the majority of hospitals are complying with current price transparency rules. The hospital also said it is publishing a price estimating tool in a format that is easy for consumers to understand.
Ivey said if small businesses knew what hospitals, doctors and other health care providers charge, they would have a better idea of how to track costs. Instead, Epting and its employees pay higher premiums each year than ever before, which has become a point of contention for some employees.
“Some people say, ‘I’ll go work somewhere else in town because I’ll get more health insurance coverage,'” Ivey said.
Employers downplay coverage of weight loss drugs like Wegovy
Research shows that most employers do not cover the cost of expensive weight loss drugs such as Wigoby, and those that do cover these drugs often have requirements.
Companies that pay for weight loss drugs may require employees to follow strict guidelines, such as visiting a nutritionist, psychologist, caseworker, or therapist to get a prescription. Other companies require employees to participate in weight loss programs before or while taking one of a new class of weight loss drugs called glucagon-like peptide 1 (GLP-1) agonists.
One in four large employers covers weight loss drugs, and 46% said that coverage has a “significant impact” on prescription drug spending.
However, most companies do not cover these drugs, nor do they plan to do so anytime soon. Among companies with 200 or more employees that do not cover GLP-1 agonists, which are primarily used for weight loss, 62% said they were “unlikely” to pay for the drugs next year.
Although many companies cover diabetes medications such as Ozempic, the same coverage does not apply to similarly prescribed weight loss drugs that cost more than $10,000 per year.
The weight-loss drug has proven popular in a country where nearly two in five adults are obese, according to estimates from the Centers for Disease Control and Prevention.
North Carolina officials determined that the combination of high list prices and the number of users that state officials expected would be too high to sustain. To continue covering weight-loss drugs, the state would have had to raise premiums to nearly $50 a month for the roughly 750,000 employees and their dependents covered by the state’s health plan.
More than 23,000 people with health plans in North Carolina were using these prescription drugs to lose weight. State drug costs averaged more than $800 per month per member, including rebates. State treasurers predict the state’s bill for the drug will soar to more than $1 billion over the next six years, a key reason the state chose to discontinue coverage.
KFF’s Ray said employers considering coverage will need to “understand the astronomical costs and potential health benefits of these drugs” to reduce obesity and make employees happy. He said he was having a hard time.
“Employers have a difficult problem to solve,” Ray said.
Ken Alltucker is at @kalltucker in X. Email alltuck@usatoday.com.
