ECONOMIC REPORT OF THE PRESIDENT

Figure 4-45
Average Nominal Premium for
Employer-Based Family Coverage, 2010–2016
Average Nominal Premium for Employer-Based Family Coverage
22,000
20,000
18,000
Counterfactual Premium if
Growth Rate Matched
2000–2010 Average
Actual
Premium
2016
16,000
14,000
12,000
2010 2011 2012 2013 2014 2015 2016
Source: Kaiser Family Foundation and Health Research and Educational Trust, Employer
Health Benefits Survey; CEA calculations.
that slower growth in health care costs is associated with faster employment
growth (Baicker and Chandra 2006; Sood, Ghosh, and Escarce 2009).
Lower Premiums and Out-of-Pocket Costs in Other Forms of Coverage
Slow growth in health care costs has also reduced premiums and
out-of-pocket costs for people who get coverage outside the workplace. For
example, due to recent years’ slow health care cost growth, per beneficiary
Medicare spending has come in well below earlier projections. As discussed
in detail in the next section, this development is generating major savings
for the Federal Government. However, this development is also reducing
the premium and cost-sharing obligations borne by Medicare beneficiaries.
Focusing first on premiums, Medicare beneficiaries generally pay a
premium to enroll in Medicare Part B, which covers outpatient services,
and Medicare Part D, which coverage prescription medications.36 The
standard Medicare Part B premium is set to cover approximately 25 percent
of program costs, while the base Medicare Part D premium is set to cover
25.5 percent of the cost of a standard plan design. Consequently, when per
36 Very few beneficiaries pay a premium to enroll in Medicare Part A (which covers inpatient
hospital services and certain other services) because almost all beneficiaries are entitled to
coverage based on their prior work history.
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