September 27, 2019

The cost of a family's employer-sponsored health coverage? More than $20,000.

Daily Briefing

    Annual premiums and deductibles for employer-sponsored health coverage increased faster than both wages and inflation in 2019, according to Kaiser Family Foundation's (KFF) annual Employer Health Benefits Survey.

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    Survey details

    For the survey, KFF partnered with National Research and NORC at the University of Chicago. National Research surveyed human resource and benefits managers at 2,012 U.S. employers from January to July 2019 on employer-sponsored health coverage for single individuals and families.

    Findings

    The survey found that between 2018 and 2019 the average annual premium for employer-sponsored health plans increased by 4% to $7,188 for a single individual, and by 5% to $20,576 for a family of four.

    The survey found workers enrolled in single plans paid about 18%, or $1,242, of the total, with employers picking up the rest, and employees enrolled in family plans paid nearly 30%, or $6,015, of the total, with employers picking up the remainder.

    According to the survey, average premiums rose at a faster rate than wages—which increased by 3.4%—and inflation—which increased by 2%—from 2018 to 2019. The survey noted average premium growth has outpaced wage growth and inflation over the past several years.

    The survey also showed the average deductible for a single individual increased from $1,573 in 2018 to $1,655 in 2019. According to the survey, the total number of employees with employer-sponsored health plans who have an annual deductible of $2,000 or more increased from 26% in 2018 to 28% in 2019.

    The survey also showed most employees with employer-sponsored health plans had extra cost sharing. For example, 66% of percent of covered employees had to pay coinsurance and 14% had a copayment for hospital admissions, the survey showed. The survey found that the cost-sharing amount varied by the plan, ranging from an average 20% coinsurance payment to an average $326 copayment. In addition, nearly two-thirds of covered workers had an average $25 copayment for doctor's office visits, while 25% paid an average coinsurance fee of 18%.

    The survey results also showed a number of differences between companies with larger and smaller shares of lower-wage employees, defined by the survey as employees with annual incomes of $25,000 or less.  

    For instance, the survey showed individuals employed at companies with a large number of lower-wage employees had higher deductibles and contributed a higher share of their incomes toward premiums, when compared to individuals employed at companies with a smaller share of lower-wage employees. 

    The survey also showed fewer employers at companies with a large share of lower-wage employees were eligible for employer-sponsored health plans, when compared to companies with a smaller share of lower-wage employees. Specifically, the survey showed about 66% of employers at lower-wager companies were eligible for coverage, compared with 81% of employees at other companies.

    Discussion

    Gary Claxton—an SVP and director of the Program on the Health Care Marketplace at KFF, who was involved in the survey and co-authored an accompanying report—said, "There are a lot of people who feel pretty well serviced by their coverage. But there are a lot of people for whom it's a little more challenging in terms of affordability and the protection their coverage provides."

    Drew Altman, KFF president and CEO, said annual premium costs have reached a "milestone." He said the cost of health insurance is comparable to "the cost of buying an economy car …  every year." He added,"The single biggest issue in health care for most Americans is that their health costs are growing much faster than their wages are. Costs are prohibitive when workers making $25,000 a year have to shell out $7,000 a year just for their share of family premiums."

    Carol Partington, senior manager of total benefits at Elkay Manufacturing, said employees are seeing their health care costs rise because costs are increasing for employers. Partington said, "If our costs go up, theirs is going to go up in that same proportion."

    Niall Brennan, president and CEO of the Health Care Cost Institute, said employers and employees are shouldering more costs because of the rising prices insurers pay for health care. He said, "The vast majority of this can be explained by prices," especially hospital care. Brennan said hospital consolidation has allowed health systems to gain a larger share of their local markets, which "enables them to engage in pretty unconstrained pricing behavior."

    However, Melinda Hatton, general counsel of the American Hospital Association (AHA), said research funded by AHA has shown revenue has decreased at merged hospitals, which means hospital rates are not increasing (Andrews, Kaiser Health News, 9/25; Wilde Mathews, Wall Street Journal, 9/25; Ellen McIntire, CQ News, 9/25 [subscription required]; Claxton et al., Health Affairs, 9/25; 2019 Employer Health Benefits Survey, 9/25).

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