Benefits

Check the Numbers: The Affordable Care Act Is Cutting Employer Costs

By Rick Bell

Apr. 16, 2015

Despite all that’s been said about the Affordable Care Act, one undeniable fact in its favor, five years after its passage, health care costs are stabilizing for employers.

The latest evidence of cost stabilization for employers comes from a new study by the ADP Research Institute. Its “2015 ADPAnnual Health Benefits Reportis a pretty comprehensive look back at five years of health benefits data from U.S.-based companies with 1,000 or more employees going back to 2011 (just FYI, President Barack Obama signed the legislation in March 2010).

According to ADP’s survey, “Since 2011, total premiums (including the employer and employee portions) increased by 9.4 percent, or about 2 percent every year.”

A story we posted in 2009 stated, “Health care premiums have risen 131 percent in the past 10 years.” That year, according to a report by the Kaiser Family Foundation and the Health Research & Educational Trust’s annual report, premiums for employer-sponsored health insurance rose to $13,375 for family coverage, up 5 percent from 2008, reported my former Workforce colleague Jeremy Smerd. That was actually a relatively modest increase compared with the double-digit spikes posted through much of that decade. That year forecasters predicted a 7.4 percent increase—which still would have marked the third consecutive year of declines.  

At the time, Jeremy quoted Drew Altman, president and CEO of the Kaiser Family Foundation as saying: “It is health care as an economic issue that has fueled the health reform debate.”

As we look back now, Altman was indeed prophetic. And it remains an economic issue to this day, though some continue to bleat that it’s purely political, conveniently forgetting the health and financial ramifications of an uninsured workforce. The ADP report clearly shows that health reform is having a positive effect as premium increases have evened out substantially.

Consider that from 2014 to 2015, total premiums increased 2.6 percent, the report notes — certainly modest compared to 2009, and a huge gain from the 2000s.

“This could be partially due to more employers offering high-deductible plans with higher copays and implementing flexible spending accounts and consumer-directed health plans,” the report states.

I think that goes without saying. And there are ramifications both pro and con to insuring your population under CDHPs.

But that’s a story — or a report — for another day.

Rick Bell is Workforce’s editorial director. For comments or questions email editors@workforce.com.

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