Several Factors Responsible For The Recent Slowdown In Premium Growth In Employer-Sponsored Insurance

Containing growth in health care spending is important to the long-term fiscal health of the United States. Researchers have been seeking to identify which factors behind the recent spending slowdown might continue to have an impact after the economy has fully recovered from the Great Recession (2007-09). We extended this inquiry by decomposing trends in the growth of private-sector employer-sponsored insurance premiums. Using data for 2001-13 from the Medical Expenditure Panel Survey-Insurance Component and a combination of cell- and regression-based decomposition methods, we found that the slowdown in premium growth that preceded the recession reflected declining growth rates in per policyholder premiums. For 2009-11, however, the dominant contributors to the slowdown were factors underlying declining employee enrollment: a sharp downturn in employment in 2009, followed by eroding offer and eligibility rates. Growth in per policyholder premiums slowed in 2012 and 2013 compared to the preceding few years. Like other researchers, we found that a substantial portion of premium growth remained unexplained. However, it is likely driven, in part, by growth in the underlying cost of medical care.