How these employees pay nothing for their insurance premiums : NPR

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Health care

How has the price changed since before the pandemic?

U.S. health care is the most expensive in the developed world, and it’s getting worse. The average annual premium for an employer-based health insurance plan for a family of four was more than $25,500 last year, according to the health policy nonprofit KFF. Of that average total, employers contributed about $19,200 and workers contributed about $6,300.

Total premiums have risen more than 24% since 2019 and are widely expected to surge next year.

Why has the price gone up?

For-profit companies — including drugmakers, pharmacy benefit managers, hospitals and insurance companies — have collectively driven up the costs of accessing medical care in the United States.

Drugmakers are developing more effective medications, including GLP-1 weight loss drugs and cancer treatments — but they’re also charging a lot for them. More people are going back to the doctor after the pandemic kept them away, driving up demand — and prices. And many insurance companies and other for-profit businesses within the health care system have merged or consolidated, often allowing the remaining businesses to raise prices for their services.

But here’s an unlikely solution for some U.S. workers

Some 154 million people in the United States get health insurance through their employer — and many could see their paycheck deductions surge next year, by 6% to 7% on average.

Employers don’t have a lot of control over these costs. But they do control how much they pass on to their workers — and across the country, some employers big and small have decided not to make their workers pay anything upfront.

Boston Consulting Group, for example, covers all insurance premiums for its roughly 10,000 U.S. employees and their families — meaning that those workers don’t have any money deducted from their paychecks toward premiums.

“Healthy employees make for a productive workforce — and also a place where our teams want to come to work every day,” says Alicia Pittman, chief people officer for BCG.

Between employees and their family members, BCG is paying the full premiums to cover about 20,000 people. That works out to a “big investment,” Pittman says, declining to specify how much.

But that kind of investment can have a big payoff for the employer, she and other executives tell NPR. Offering zero-premium health insurance helps to recruit new employees and keep turnover low.

It also helps workers stay focused on their jobs, instead of getting distracted by the expenses and frustrations of navigating the U.S. health care system.

Some smaller employers and nonprofits also provide zero-premium health care

It’s rare but not unheard of for companies to provide zero-premium health insurance to employees. According to the benefits consultant Mercer, about 12% of large employers offer at least one medical plan with free upfront coverage for an individual worker. (Only 2% cover employees’ dependents for free, however.)

But it’s not just big for-profit companies that offer some form of zero-premium health insurance. So do some nonprofits, small businesses and startups, according to interviews NPR has conducted with executives and employees at several employers over the past few weeks.

“Health care is one of these nonnegotiables,” says Oliver Kharraz, the CEO of Zocdoc, which makes scheduling software that people can use to book doctor’s appointments online.

Getting health care in the United States involves many costs beyond just premiums, of course: Many low-premium plans can have high deductibles, copays or other forms of “cost sharing.”

And Zocdoc doesn’t cover all the costs of the health insurance it provides to employees. It offers multiple plans, and people who pick the zero-premium one have to pay a higher deductible, although the company does chip in to a health savings account to cover some of it.

“It is a growing expense, no doubt,” Kharraz says. “But we think that it’s our job to make sure that the company is healthy enough that we can afford to bear it.”

It’s something that startup founder Ryan Close was determined to provide to employees from the beginning. In 2019, he and his family moved to Chicago from Canada — and the first time one of them got sick and Close needed to pick up a prescription, he had a rude awakening.

“It was like ‘Whoa … this is a wake-up call. And this isn’t cheap,'” he says.

Close is the founder and CEO of Chicago-based startup Bartesian. The company sells an at-home cocktail machine and the pods to go in it — similar to a Keurig or a Nespresso, for boozy drinks. It has had a blockbuster few years since the pandemic, and it has raised $40 million from investors (including Chicago Cubs Chairman Tom Ricketts and the Suntory liquor conglomerate that owns Jim Beam).

Now Close is spending some of that money on his 30 employees. Bartesian covers all medical, dental and vision premiums for its employees and their families. It also contributes $1,000 annually toward their flexible spending accounts.

There are definitely trade-offs for doing so, including seeing costs rise as Bartesian grows and health care prices surge. Meanwhile, there are also trade-offs for employees: The company doesn’t offer some other mainstream employee benefits, including a formal parental leave policy.

But Close believes his startup’s zero-premium health care has made it easier and cheaper to hire talented people and continue growing.

“We’re saying something about how we are as a company, where we value our team members,” he says.

“We think that them being able to take care of their children and their wives and their husbands is a priority,” he adds.

And Close has a very simple rationale for why he’s willing to continue paying more for his employees’ health care.

“It really stemmed likely from being Canadian,” he says. “I just probably took for granted, ‘Oh, of course I don’t pay for health care.'”