Reclaiming Common Sense

What happened to Premiums Falling Under the Affordable Care Act?

It never happened.

The Kaiser 2019 Study Employer Health Benefits Survey was release September 26, 2019. It examines a number of various factors including Premium costs, deductibles, and percent coverage, among other measures. The headline elsewhere was that the Average Annual Premium for a Family exceed $20,000 a year for the first time. What else was reported? (Figure 1.10)

Individual Annual Premiums rose by 4.2% this year. The combined contributions from workers and employees broke through the $7000 level at $7188. Employers provided $5946 and employees provided 1242. The employee share was roughly $100 a month. If you look at the data Individual deductibles increased from and average of $1573 to $1651 (Table 7.10.)  The amount of the deductible varied by plan type from roughly $1200 for HMO and PPO plans to $2466 for High Deductible High Premium (HDHP) plans.

The percentage that the employee funds rose from 17.20% to 17.28%. The employee saw 4.72%  premium inflation this year while the employer saw 4.11% inflation. The data can be foundhere.

Family Annual Premiums rose by 4.8% this year.  The combined contribution for family rose from $19,616 to $20,576 this year. Employees paid $6015 per year, on average, while employers provided $14,561. Families are paying, on average, $500 a month for health insurance. Deductible ranged from $881 for HMOs, $1091 for PPOs, $932 for POS plans, to $3076 for HDHP plans.

The percentage that employees funded rose from 28.28% to 29.11%. Employees saw their premium costs rise by 8.44% while employers saw 4.14% inflation. The data can be found here.

The percentage of firms offer health benefits remained at 57%, off the 2017 low of 53%. There is considerable variation between the size of the firm providing health insurance benefits. It is unfortunate that the break down is for 3-9 workers, 10-199 workers, and over 200 workers. The ACA required insurance to be provided for companies over 49 employees. Figure G of the report showed a peak coverage year of 2010 when 82% of firms between 10-199 workers and 59% of firms 3-9 workers in size provided benefits. We are now seeing forms of 10-199 providing benefits at a rate of 71% and firms of 3-9 workers at 47%.

So what about the double digit increases in health insurance costs that are referenced in the monthly Consumer Price Index (CPI) report? This does not appear to be linked with the private sector health care costs. It is possible, and has been stated elsewhere, that it is related to Medicare/Medicaid premiums.

Are part-time employees being offered health care benefits at a higher rate? The 2019 Kaiser report indicated that companies are offering part-time employers are offering insurance at a higher rate (Figure 2.9, page 50 than they were during 2017 and 2018). What is reality? The definition that they use is the 30 hour threshold defined in the ACA. The problems are that the Current Population Survey data still measures full-time as people working 35 hours or more a week. Another problem is that the ACA defines a work week as full-time equivalent worker (FTE) as someone who works 2080 hours a year, or 52 weeks times 40 hours per week. Finally, the ACA defines the threshold as 50 workers working 2080 hours, or the equilvalent of 104,000 work hours per year of combined full-time and Part-time workers. There are exceptions for seasonal work, family members, and overtime hours. It is also interesting to note that the percentage of companies offering PT employees health insurance has dropped since the adoption of the ACA.

The Affordable Care act was supposed to reduce the costs of premiums. That has not happened. Premiums have been rising every year of the Kaiser study. Employer provided coverage was supposed to improve under the ACA. That did not happen until it dropped to a low of 40% for firms of 3-9 employees and a low of 53% for all firms, during 2017. The level of full-time workers was lower during January 2017 than were present during July 2007. (See "Four Presidents at 96 months: Participation Matters.") Premiums are up. Deductibles are up. Even co-pays have risen. All of this is available in the Kaiser Foundation Report.

It's the Economy.

Copyright ©2019,  "2019 Employer Health Benefit Survey”Kaiser Family Foundation,  All rights reserved.  September 26, 2019 ,