Washington, D.C. — While overall growth in health care costs has slowed dramatically in recent years, Americans with employer-sponsored insurance, or ESI, have not seen the effects of the spending slowdown. The cause has been the practice of employers shifting greater responsibility for health care costs over time to their employees in the form of higher deductible plans, higher co-pays, and higher co-insurance or by paying a smaller share of premiums.
In a groundbreaking new study, the Center for American Progress analyzed cost data in the ESI market and found that employees are bearing the brunt of health care cost increases in real dollars, while their employers’ costs are growing at a slower rate.
“Health care costs are stabilizing nationally, but one group has yet to benefit—middle-class workers,” said CAP President Neera Tanden. “These workers have faced higher out-of-pocket expenses even as employers and insurers see lower costs. Our analysis shows that the practice of shifting costs can have the effect of making health care treatment less affordable. It is time for middle-class workers, who are facing a squeeze from stagnant wages and higher costs, to share in lower costs.”
The CAP report uses a novel way to look at health care spending data from 2007 through 2013, creating the most accurate picture available of the real-world costs associated with the prevailing trend of shifting costs from employers to employees. It makes simple but effective recommendations that will help bring down costs for employees and improve overall health outcomes.
The recommendations include:
- Requiring employers to distribute an annual transparency notice on the relative changes to employers’ and employees’ premium contributions over the upcoming year. The notice will explain in easily understood language the differences between what the employer and the employee will pay in the future plan year compared with the previous year and will require a metal-level ranking of the plan similar to that offered by plans in the Affordable Care Act’s, or ACA’s, exchanges.
- Expanding the ACA’s free preventive services benefit to include three primary care visits per year in order to reduce the pressure of higher out-of-pocket costs on consumers as they seek primary care services. This will help consumers get necessary primary care, such as a parent taking a sick child to the doctor during flu season.
- Creating a shared savings rebate from employers to employees for employers who have their health care costs grow at a significantly lower rate than other businesses due to costs shifted to employees. Under the plan, half of the savings resulting from cost shifting would be offered to the employee in the form of a rebate. A buffer zone is built in, so employers will only be subject to the shared savings rebate in the most egregious cases.
Click here to read the report.
For more information on this topic or to speak with an expert, contact Tom Caiazza at [email protected] or 202.481.7141.