Premiums for employer health plans continue to grow at historically low rates, yet a growing number of small firms are finding the price tag for coverage is just too big.
Annual family premiums for employer-sponsored health insurance rose an average of 3 percent to $18,764 this year, marking three consecutive years of growth rates in the low single digits, according to an annual report on premium trends released Tuesday by the California-based Kaiser Family Foundation. On average, nearly 70 percent of the premium is picked up by employers.
At companies with fewer than 50 workers, the share offering health benefits fell to 50 percent, the survey found, down from 59 percent in 2012. Among small firms that don't offer health benefits, most said costs were too high or the business was too small.
"While the rate of increase may have slowed down, the number — the cost — is just high," said Drew Altman, the foundation's chief executive, during a conference call with reporters. "And so it's a struggle for them."
The Kaiser survey doesn't report state-level data on premiums or trends, although it includes responses from Minnesota employers. Business groups here have complained for years about the growing cost of health coverage, and pointed to declines in the number of small business health plans as a worrisome trend.
Whereas 348,026 people in Minnesota were covered through what are called "small group" health plans in 2012, the number by 2016 had fallen to 273,437, according to the Minnesota Council of Health Plans, a trade group for health insurers. A lot of the drop came in 2014 when many small group plans disbanded, the trade group said, because workers could find cheaper policies in the state's individual market.
This summer, Minnesota health insurers proposed a higher range of premium increases for small business health plans in 2018 compared with this year, with the largest carrier in the market seeking average increases of 14 percent to 17 percent.
Numbers like those in the Kaiser report that chart moderate premium growth for groups overall make it particularly tough for small firms when they see higher renewal rates, said David Martin, an executive vice president with Associated Benefits and Risk Consulting. Even so, it can be tough for firms to drop coverage given the tight labor market.