A small respite in the rate of escalation for medical costs may be coming to an end, another recent health benefit study agreed. Willis Towers Watson's survey of 678 U.S. employers polled in June and July showed that respondents expect their health care costs to increase on average by 5.5 percent in 2018, up from the 4.6 percent increase they saw for 2017.

Jump in Drug Prices Is Less Steep

Segal Consulting, an HR advisory firm, highlighted some good news for health benefit sponsors. Prescription drug cost growth will be lower for 2018, the firm predicts, reversing a multiyear trend of ever-bigger annual price jumps.

Segal's Fall 2017 report on prescription cost trends is based on a survey of more than 100 health insurance providers, conducted during the summer of 2017. 

In recent years, increased use of generic drugs "has helped mitigate prescription cost increases," and it's become more common for pharmacy benefit management (PBM) firms to exclude high-cost specialty drugs from their formulary and offer therapeutically equivalent generic alternatives, said Edward Kaplan, national health practice leader at Segal.

"Plan sponsors should continue to aggressively negotiate and renegotiate their PBM contracts to help manage the prescription costs," advised Eileen Pincay, Segal vice president and senior pharmacy consultant.

Health Premiums Higher at Small Employers

Employees who receive health coverage through smaller employers generally must pay more to cover their families, according to findings from the nonprofit Kaiser Family Foundation's (KFF's) 2017 Employer Health Benefits Survey, released in September.

"Small firms are much less likely to offer health benefits to their workers, and when they do, workers may find it quite costly to enroll their families," said study lead author Gary Claxton, a KFF vice president.

The survey was conducted with the nonprofit Health Research and Educational Trust (HRET) between January and June 2017 and included 3,938 private firms with three or more employees. Among the findings:

• Workers covered by small firms on average contribute $1,550 more annually for family health coverage than those at large firms ($6,814 compared to $5,264).
  

• More than one-third (36 percent) of workers at small firms pay most of the total premiums for family coverage; far fewer (8 percent) do so at large firms.
  

• Workers covered in preferred provider organization (PPO) plans, the most common plan type, face an average aggregate family deductible of $3,660 at small firms, nearly twice the $1,899 average at large ones.
  

The data are more mixed for workers enrolled in single coverage:

• Workers on average contribute $1,213 annually toward their single premium, though workers at small firms on average contribute less ($1,030) than those at large firms ($1,289).
  

• The average annual deductible for single coverage across all workers in plans with deductibles is $1,505 in 2017, but it is 66 percent higher for workers at small firms ($2,120) than large firms ($1,276).
  
  

In August, United Benefit Advisors (UBA), a network of independent employee benefits advisory organizations, reported that small businesses are passing on to employees nearly 6.6 percent more of the costs for single coverage and nearly 10 percent more of the costs of family coverage compared to large firms. 

Those numbers increase to 17.8 percent more of the costs for single employees and over 50 percent more for family coverage when you compare small employers to their largest counterparts—those with more than 500 employees—noted Bill Olson, chief marketing officer at UBA.

Average Single Monthly Premium (All Plan Types): 1 to 24 employees: $149 24 to 49 employees: $130 50 to 99 employees: $124 500 to 1,000 employees: $114 ------------------------------------- All employers: $126 Average Family Monthly Premium (All Plan Types): 1 to 24 employees: $591 24 to 49 employees: $525 50 to 99 employees: $472 500 to 1,000 employees: $352 ------------------------------------- All employers: $482 Source: United Benefit Advisors.

Premiums Differences by Plan Types