Employees Still Bear the Brunt of Health Insurance Costs

A new report comparing employer health insurance costs between states since the Affordable Care Act found that even though the worker’s premiums and deductibles are growing at a much slower rate, a considerably larger share of income is dedicated toward healthcare. This discrepancy arises because median incomes are not keeping pace with the increase in healthcare costs.

The Commonwealth Fund report “The Slowdown in Employer Insurance Cost Growth: Why many Workers Still Feel the Pinch” offers a state-by-state look at employer health insurance costs. It finds that the worker’s premium contributions and deductibles are growing more slowly but unfortunately eating up a greater share of their incomes.

“The good news is that premiums in employer plans are growing more slowly on average, as is the amount employees are being asked to contribute,” said Sara Collins, vice president for Health Care Coverage and Access at The Commonwealth Fund and the study’s lead author. “Unfortunately, many employees with moderate incomes aren’t feeling the benefits of these slowdowns, because they haven’t yet experienced the sustained growth in their income needed to keep up with health costs.”

Highlights of the Report

The authors analyzed federal Medical Expenditure Panel Survey data to compare cost trends over the 10-year period from 2006 to 2015. They found that employees’ contributions to their health insurance premiums rose slowly between 2010 and 2015 in 30 states and Washington, DC. Their deductibles grew more slowly in 27 states.

However, on average, many families are spending a bigger share of their income on healthcare than they were prior to 2010. That is because median incomes, despite their recent surge, have not kept pace with healthcare costs.

While nationally, the employer health insurance costs have grown at a slower pace, states such as Arizona, Florida, Mississippi, Oklahoma, and Texas still have the highest insurance cost burdens.

On average, families spent 10.1% of their income on health insurance premiums and deductibles in 2015. However, in Mississippi, families spent 14.7% of their income. In Arizona, Florida, Mississippi, New Mexico, Oklahoma, Tennessee, and Texas, families paid 12% or more. The lowest spending was seen in the District of Columbia and Massachusetts at 6.8% and 7.3%, respectively.

Initiatives May Improve Affordability

Even though employer premium costs and employee contributions to their health insurance costs have grown more slowly since 2010, many Americans continue to be pinched by their health care costs. The report suggests that additional years of strong income gains will improve families’ ability to afford their healthcare. Additionally, innovation in health plan design to incentivize, rather than discourage, people to get the care they need would also help. Finally, keeping the cost of healthcare in check will be critical to keeping employer premiums and deductibles down.

“The vast majority of people under age 65 in the US, 154 million, get their health insurance through an employer, and many of them struggle to pay for it,” said The Commonwealth Fund’s president, David Blumenthal, MD. “It would help if employers designed health plans that help their workers afford timely care.”