Employer health insurance costs are expected to rise only 4.1% in 2019 – study

(This post originally appeared on The Guardian)

Remember when the rising cost of healthcare was one of the biggest issues facing both individuals and businesses? It turns out, that issue is not such an issue this year.

Health benefits consulting firm Mercer, in a new study of 1,566 employers, projects that the health benefit cost per employee will increase only 4.1% next year. That’s slightly higher than inflation and certainly less than the double-digit increases we’ve seen in years past. The trend isn’t just for businesses. According to a recently released study by the Associated Press and consulting firm Avalere Health, most of the Affordable Care Act’s individual marketplaces will also see a steadying of prices next year – a 3.6% average increase in proposed or approved premiums across 47 states and Washington DC.

Why so? The markets have stabilized and health insurance companies – who have now returned to profitability – are better able to determine healthcare premiums. Just as importantly, many mid-sized and large employers are also taking more proactive steps to control their costs.

“The improvement in the underlying medical plan trend is encouraging because those savings are not solely coming from shifting cost to employees,” Tracy Watts, Senior Partner and Mercer’s Leader for Health Reform said in a press release. “It suggests that there is a ‘quiet revolution’ going on in organizations as they deploy more innovative health benefit strategies – and that these have started to pay off.”

Mercer’s report says that although it was common in the past for employers to shift more of the cost of healthcare to their employees (through the form of higher co-payments and deductibles or offering less attractive plans) this year employers are relying on technology more to help them keep their company’s health costs in line.

For example, they’re getting better at targeting employees with specific health issues like insomnia and infertility and offering more directed services to help them deal with those problems, which is improving their quality of life, decreasing trips to the hospital and lowering costs. Others are working with their insurance providers to offer more choice and easier to understand healthcare options that are delivered through more user-friendly online platforms. Some employers are having their health consultants mine employee data to better identify workers with more serious health issues in advance so that they can provide a more proactive outreach and offer alternative or less expensive but just as effective services.

So are we now in an era of lower healthcare costs? Don’t be so sure. Congress and the Trump administration is determined to repeal the Affordable Care Act and has taken steps this year – such as the introduction of Association Health Plans and the recent removal of the ACA’s individual mandate requirement – that may undermine the legislation and could introduce more uncertainty into the market. Or not. Who knows. One thing’s for sure: the battle over healthcare in Washington is far from over.

The good news is that big and mid-sized corporations are using technology successfully to reduce their overall healthcare expenses. And like everything else, their successes will ultimately trickle down to small businesses too in the form of cost savings throughout the entire healthcare system. If you’re a small business owner, you should be keeping an eye on what your larger counterparts are doing and work closely with your benefits provider. My expectation that many of these technologies – like the data mining tools they’re using – will soon be available for small businesses to leverage as well.