The political controversy over the Affordable Care Act has overwhelmed some positive trends in insurance premiums, especially in the marketplace that affects most Minnesotans – employer-provided coverage.
According to the Kaiser Family Foundation/Health Research & Education Trust 2017 Employer Health Benefits Survey, premiums for employer-sponsored family health coverage increased only about 3 percent this year.
“This year’s premium increase is similar to the rise in workers’ wages (2.3 percent) and inflation (2 percent) over the same period and continues a remarkable slowdown. Since 2012, average family premiums have increased 19 percent, more slowly than the previous five years (30 percent increase from 2007 to 2012) and the five years before that (51 percent from 2002 to 2007),” said Kaiser in a statement accompanying the study.
The forecasts for 2018 also are positive, especially for employees of large companies. According to the National Business Group on Health, premium increases for its large-employer members will average about 5 percent next year. “Including premiums and out-of-pocket costs for employees and dependents, the total cost of health care is estimated to be $13,482 per employee this year, and projected to rise to an average of $14,156 in 2018. Employers will cover nearly 70 percent of those costs while employees will bear about 30 percent, or nearly $4,400 in 2018,” said NBGH.
The slowdown in the rate of premium increases for employer-provided health coverage is important to Minnesotans, a majority of whom receive their coverage from their workplace. In fact, nearly 56 percent of Minnesotans are covered by employer-provided group plans.
In spite of the good news, there are red flags on the horizon. Overall health spending in Minnesota is projected to nearly double by 2024 from its 2011 level, according to a July 2017 MDH report to the Minnesota Senate Select Committee on Health Care Consumer Access and Affordability. Spending is estimated to increase from $38.1 billion to $75.6 billion.
While some of the growth in health spending will come from increased volume and service mix (Minnesotans are using more health care, driven in part by an aging population), the biggest driver of the increased spending is the ever-growing cost of health care services themselves. Leading the way, according to the report to the state senate, are increases in pharmaceutical spending.
A particular concern is the growing cost of so-called specialty drugs – the very high-cost prescription medications used to treat complex, chronic conditions like cancer, rheumatoid arthritis, and multiple sclerosis. While these drugs can be hugely beneficial to patients, they are very expensive, “often $1,000 or more per month – and spending on them is growing 15 to 20 percent a year,” according to an industry source.
An NBGH survey of its large employer members found that for the second consecutive year, specialty pharmaceuticals were ranked as the top driver of medical costs.
All of which underscores the importance of focusing on what really matters. While political controversy swirls around the insurance exchanges and other Affordable Care Act provisions, reducing the underlying cost of medical care is essential to controlling increases in insurance premiums.