Despite warnings from Obamacare detractors that the law would increase the cost of health services for privately insured Americans, the rate of premium and deductible growth has considerably slowed down in 31 states and the District of Columbia since the health law’s passage, according to an issue brief from the Commonwealth Fund.
Since lawmakers enacted the Affordable Care Act in 2010, the average premiums for employee-only plans fell to 4.1 percent per year from an average of 5.1 percent in the years before, according to the Commonwealth Fund report, which outlines the cost of employer health care coverage between 2003 and 2013.
Southern and western states saw the greatest changes, with annual premiums slowing down by nearly seven percentage points in Louisiana. Premium growth also slowed down by at least three percentage points in D.C., Florida, Maine, Missisissppi, Rhode Island, and Virginia.
“This slowdown came during a time when some critics had warned that health insurance reforms might increase the costs of health insurance for people with private insurance,” the Commonwealth researchers write. “The recent slowdown in premium growth reflects a reduction in spending on health care services since 2009.”
While that’s some cause for optimism, employees with private insurance still remain burdened by rising out-of-pocket health care costs, mainly because their wages have remained stagnant within the last decade. The average premiums shared between employers and employees constitute between 20 and 25 percent of Americans’ annual income for people under the age of 65 in many states.
“Without growth in income, rising out-of-pocket costs means less affordable care,” Cathy Schoen, the executive director of the Commonwealth Fund’s Council of Economic Advisors, told the New York Times.
The Commonwealth Fund study confirms a larger trend of employers shifting health costs onto their employees. Employers have used these methods within the last decade as part of an effort to save money, ultimately to the detriment of employees who most likely have to meet other financial obligations.
The portion of employees paying annual deductibles rose 25 percentage points within the last decade. As doctor’s visits and consultations have increased among formerly uninsured Americans who benefited from Medicaid expansion and state and federal exchanges, more middle and working-class Americans have postponed medical procedures and rationed pills just as their poorer counterparts have done in previous years.
Schoen, also lead author of the Commonwealth Fund report, said that cost-sharing serves as a means of controlling potentially exorbitant health care costs for both employers and employees. Health experts call this the “skin in the game” theory. Proponents of this theory believe that when employees take on some of health care costs, they will think more critically about the number of doctor’s visits, tests, and procedures they use.
“Health insurance is expensive, no matter where you live,” Schoen, also lead author of the report, told the Cleveland Times. “If these employees had to pay for full cost on their own, health insurance would likely be unaffordable.”
In the conversation about rising health care costs, few people have placed the onus on employers to raise wages to lessen the impact of out-of-pocket costs on employees. In the past 10 years, inflation-adjusted wages and salaries have remained relatively unshakable, slightly falling from $22.45 per hour in 2004 to $22.13 in 2014. Although the economy has shown some improvement since 2009, the real value of employee compensation increased by less than 1 percent.
Despite concerns that increasing wages too soon would offset post-recession gains, Federal Reserve Chair Janet Yellen said that employers still have room to help their employees. “There is some room there for faster growth in wages and for real wage gains before we need to worry” about this “creating overall inflationary pressure for the economy,” Yellen told the Senate Banking Committee on July 15.