December 5, 2019

Editor's note: A previous version of this story misrepresented employees' average contributions in the charts below. The story has been updated to reflect the correct numbers.

Americans with employer-sponsored health plans are contributing an increasingly large portion of their incomes to deductibles and premiums, with those contributions rising at faster rates than the median income in recent years, according to a recent report from the Commonwealth Fund.

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For the report, researchers from Commonwealth looked through Medical Expenditure Panel Survey Insurance Component data and found that, between 2016 and 2018, deductibles increased by 4.8% and employee's premium contributions increased by 4.2%. Meanwhile, during that same time, median income rose by 3.4%.

According to the researchers, the growth rates for premiums increased significantly between 2016 and 2018 for both single-person plans and family plans. The researchers found that premiums for single-person plans, which increased by 2.3% between 2014 and 2016, increased by 4.9% between 2016 and 2018, and that premiums for family plans, which increased by 3.1% between 2014 and 2016, increased by 5.1% between 2016 and 2018.

The researchers found that these increases in employees' contributions to their premiums and deductibles varied substantially across the country. For example, in Mississippi, residents could spend more than 16% of their incomes on premiums and deductibles, whereas those in Massachusetts allocated an average of 8.4% of their median income to such costs.

However, the researchers found that the overall financial trend is spreading—and deepening—throughout the country. According to the researchers, employees' average contributions in 2008 exceeded 10% of the median income in just seven states—but by 2018, employees' average contributions exceeded 10% of the median income in 42 states, including 16 states where these contributions accounted for more than 12% of the median income. According to Sara Collins, vice president for health care coverage at Commonwealth, premium contributions generally were higher in the South:

Overall, employees' contributions to both premiums and deductibles averaged $7,388 in 2018, ranging from $5,815 in Washington, D.C., to more than $8,000 in nine states. When looking at premium contributions alone, the researchers found that employees' average contribution in 2018 was $5,431 for family coverage and $1,427 for single-person plans.

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David Blumenthal, president of the Commonwealth Fund, said the majority of U.S. residents under 65 get their health insurance through their employers, "and that insurance is less and less affordable for many of them."

He added, "Ensuring that everyone can afford health insurance and health care will require policy fixes and system-wide efforts to get to the heart of the health care cost problem—the exorbitant prices we often pay for healthcare in the United States."

Collins said researchers have not yet seen significant drops in enrollment in employer-sponsored health plans, but with costs continuing to rise, the concern is growing. "The question is: if people are facing premium costs that high, at what point do they decide not to continue having insurance or electing insurance plans?" Collins said, adding, "At what point does it become a matter of public policy to think about addressing that affordability issue?"

Rep. Donna Shalala (D-Fla.), a former HHS secretary, said employers likely will attempt to renegotiate their insurance contracts and more tightly manage drug costs to decrease costs for their employees. "What [employers] have all done is try to manage costs down so they don't have to shift more onto their employees," Shalala said. She added that she was not surprised by the report's findings but is concerned about the cost increases. She said, "[G]ood employers will limit the premiums for their lower-income workers" (Conarck, Miami Herald, 11/21; Lagasse, Healthcare Finance News, 11/21; O'Brien, HealthLeaders Media, 11/21).

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