Health insurance cost increases for U.S. employers slowed again in 2013, but businesses are bracing for higher costs ahead, according to a new nationwide survey released by Mercer LLC. Meanwhile, a separate survey by the National Association for the Self-Employed reflect low expectations that small businesses will be able to secure coverage for their employees that's both affordable and comprehensive.
According to the National Survey of Employer-Sponsored Health Plans conducted annually by Mercer, growth in the average total health benefit cost per employee slowed from 4.1 percent in 2012 to just 2.1 percent this year. Per-employee insurance costs averaged $10,779, including employer and employee contributions for medical, dental and other health coverage.
However, employers expect that the rate of growth in the per-employee cost of coverage will rebound next year to 5.2 percent. This increase reflects changes they will make to reduce costs; if they made no changes to their current plans, they estimate that costs would rise by an average of 8 percent.
"The good news is that employers have already taken decisive action to slow cost growth so they will be in a better position to handle the challenges ahead," said Julio Portalatin, president and CEO of Mercer. "But the impact of the (Affordable Care Act) on enrollment levels remains a huge question mark."
Greater Des Moines employers right now are deciding on their options for health coverage for 2014. Read Friday's Business Record cover story about how small employers and insurers are responding to changes in the market here.
A breakout of Iowa employers' responses provided by Mercer showed a 2013 rise of 5.2 percent in health benefit costs, more than twice the rate of increase nationally. That increase brought the average Iowa rate to $10,831, or $52 more than the national average.
Iowa respondents said they believe their 2014 health plan costs will increase by 9.5 percent if they make no changes, but that they expect to hold their cost increase to 6.8 percent by making changes to plan design or changing carriers.
"There are a lot of unknowns when it comes to enrollment," said Jim Green, an Iowa leader in Mercer's health and benefits business in Urbandale. "A big question is how many employees will enroll for the first time, given that the tax penalty for not obtaining coverage is relatively small. But an employer might wind up covering more dependents if others in the area have made changes to discourage their employees from enrolling dependents."
In a separate study released this morning by the National Association for the Self-Employed, nearly 60 percent of respondents believe there is a "low" or "very low" chance they'll be able to secure both affordable and comprehensive coverage in 2014.
Although cost growth has slowed among employers of all sizes, it was lowest for small employers in 2013, according to the NASE survey, which polled 498 small and microbusiness owners from across the country.
Among those with 10 to 500 employees, average costs rose by only about 1 percent, while among very large employers - those with 5,000 or more employees - they rose 3.7 percent.
The Mercer survey asked Iowa employers how likely they are to terminate their medical plans within the next five years, after the new state insurance exchanges provide individuals with another source of coverage.
Ten percent of Iowa respondents say they are likely or very likely to do so. Nationally, 6 percent of large employers and 31 percent of small employers say they are likely or very likely to terminate their plans within five years.