By Sara R. Collins and David C. Radley
The Commonwealth Fund, December 7, 2018
Recent national surveys show health care costs are a top concern in U.S. households. While the Affordable Care Act’s marketplaces receive a lot of media and political attention, the truth is that far more Americans get their coverage through employers. In 2017, more than half (56%) of people under age 65 — about 152 million people — had insurance through an employer, either their own or a family member’s. In contrast, only 9 percent had a plan purchased on the individual market, including the marketplaces.
Highlights
- After climbing modestly between 2011 and 2016, average premiums for employer health plans rose sharply in 2017. Annual single-person premiums climbed above $7,000 in eight states; family premiums were $20,000 or higher in seven states and D.C.
- Rising overall employer premiums increased the amount that workers and their families contribute. Average annual premium contributions for single-person plans ranged from $675 in Hawaii to $1,747 in Massachusetts; family plans ranged from $3,646 in Michigan to $6,533 in Delaware.
- Average employee premium contributions across single and family plans amounted to 6.9 percent of U.S. median income in 2017, up from 5.1 percent in 2008. In 11 states, premium contributions were 8 percent of median income or more, with a high of 10.2 percent in Louisiana.
- The average annual deductible for single-person policies rose to $1,808 in 2017, ranging from a low of $863 in Hawaii to a high of about $2,300 in Maine and New Hampshire. Average deductibles across single and family plans amounted to 4.8 percent of median income in 2017, up from 2.7 percent in 2008. In three states (Florida, Mississippi, and Tennessee), average deductibles comprised more than 6 percent of median income.
- Combined, average employee premium contributions and potential out-of-pocket spending to meet deductibles across single and family policies rose to $7,240 in 2017 and was $8,000 or more in eight states. Nationally, this potential spending amounted to 11.7 percent of median income in 2017, up from 7.8 percent a decade earlier. In Louisiana and Mississippi, these combined costs rose to 15 percent or more of median income.
Worker payments for employer coverage are growing faster than median income.
The average employee premium cost across single and family plans amounted to 6.9 percent of median income in 2017, up from 5.1 percent in 2008.
Average deductibles are also outpacing growth in median income.
In many states, even though costs are rising, people are not getting insurance that protects them more because deductibles are also increasing.
From the Conclusions
Families’ costs for employer health insurance are rising faster than median income. Moreover, even as costs climb, many families aren’t receiving higher-quality insurance. The amount they have to spend out of pocket before their insurance coverage kicks in also continues to climb. While this study only considered families with middle incomes, lower-income families with employer coverage will use an even larger share of their income for health insurance costs.
Higher costs for insurance and health care have implications. People with low and moderate incomes may simply decide to go without insurance if it competes with other critical living expenses like housing, food, and education. In 2017, average per-person expenditures on food in the U.S. amounted to 13 percent of median income and housing costs were 32 percent. People with coverage but deductibles that are high relative to income are nearly as likely as those uninsured to skip needed health care, like filling prescriptions or going to the doctor when they are sick.
Health care cost growth is the primary driver of premium growth across all health insurance markets. Policymakers will need to recognize that the increasing economic strain of health care costs facing middle-income and poor Americans is driven by multiple interrelated factors and will require a comprehensive solution.
https://www.commonwealthfund.org…
Comment:
By Don McCanne, M.D.
When the Affordable Care Act (ACA) was crafted, the sector of the private insurance market that the legislators most wanted to protect was the employer=sponsored plans. It was perceived as the private insurance sector that was still working well and the private plans with which satisfaction was the greatest (leading to the unfortunate promise, “if you like your health plan, you can keep it”).
The disappointing conclusions of this study should surprise no serious student of health policy. The excessive growth rate in health care spending needed to be addressed in the ACA legislation, but it included only token “wish-it-would-work” policies such as accountable care organizations and other value-based policy proposals. The only measures that would actually work were those that expanded barriers to beneficial care such as excessive, unaffordable deductibles and other cost sharing, and penalties for obtaining care outside of restrictive provider networks. These concepts defeat the purpose of a program that should be designed to assist patients in accessing the care that they need.
With perpetually increasing costs, it is no wonder that employees and their families are faced with higher premiums and higher deductibles. Not only that, they are paying for the increased premium contributions of their employers through their own forgone wage increases. It is easy to see how employer-sponsored insurance is a growing burden, especially for middle- and low-income families.
It is no secret that the policy design of our current health care financing system has caused it to fall far short of the goals of reform, and the tragedy is that these defects were known when ACA was crafted. But, at this stage, instead of crying over spilt milk (more accurately, spilt blood), we should promptly move forward with enacting policy improvements that will fix our system. Those improvements, of course, would be inherent in a well designed Single Payer Medicare for All program. That strategic move would automatically bring affordable, accessible care to absolutely everyone. Burdens, such as those that the employer provided plans are placing on us, would no longer be necessary.
The authors state, “Policymakers will need to recognize that the increasing economic strain of health care costs facing middle-income and poor Americans is driven by multiple interrelated factors and will require a comprehensive solution.” Obviously, that comprehensive solution would be Single Payer Medicare for All.
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