Employer-sponsored plans taking a greater share of employee income than ever before

The Commonwealth Fund
December 9, 2014
National Trends in the Cost of Employer Health Insurance Coverage, 2003–2013
By Sara R. Collins, David Radley, Cathy Schoen, Sophie Beutel

Looking at trends in private employer-based health insurance from 2003
to 2013, this issue brief finds that premiums for family coverage
increased 73 percent over the past decade—faster than median family
income. Employees' contributions to their premiums climbed by 93 percent
over that time frame. At the same time, deductibles more than doubled in
both large and small firms. Workers are thus paying more but getting
less protective benefits. However, the study also finds that while
premiums continued to rise through 2013, the rate of growth slowed
between 2010 and 2013, following implementation of the Affordable Care
Act. While families experienced slower growth in premium contributions
and deductibles over this period, sluggish growth in median family
income means families are paying more in premiums and deductibles as a
share of their income than ever before.

Premium Increases Outpace Growth in Family Income

Despite the recent slowdown in growth, insurance premiums have risen
faster than median incomes for the under-65 population. While average
family premiums have climbed by 73 percent since 2003, median family
income has risen by 16 percent over the same time period. As a result,
total premiums (including the employer and employee shares) relative to
income have continued to climb for middle-income working-age families.
In 2013, average annual family premiums were 23 percent of median family
income, up from 15 percent in 2003 and 21 percent in 2010. There are
similar trends in premiums for single coverage: average premiums have
climbed 60 percent over the decade, while median income for
single-person households has grown by only 11 percent.

Although workers are paying more for their health insurance, their
premiums are buying less financial protection, partly because more plans
include deductibles and the size of those deductibles has spiked
dramatically. In 2013, 81 percent of workers were enrolled in a health
plan with a deductible, up from 78 percent in 2010 and just over half
(52%) in 2003. As with employee contributions to premiums, incomes have
lagged growth in deductibles such that deductibles are consuming an
ever-growing share of worker income.

Research has shown that the slower growth in wages during the past
decade has been part of a trade-off to preserve health benefits. But
while growth in premiums and deductibles has slowed over 2010–2013,
median family income, when adjusted for inflation, remains below 2010
levels. Indeed, U.S. families are still trying to recapture lost income
from the financial crisis and recession of 2008: real median income is 8
percent lower than it was in 2007. It is unlikely that most families at
the middle and lower end of the income distribution are able to detect
or feel the premium slowdown in their pocketbooks since they are paying
more in premiums and deductibles as a share of their income than ever
before.

http://www.commonwealthfund.org/~/media/files/publications/issue-brief/2014/dec/1793_collins_nat_premium_trends_2003_2013.pdf

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Comment by Don McCanne

Both premiums for employer-sponsored health plans and employee
out-of-pocket expenses for health care have continued to increase well
in excess of employee income, in spite of a general slowing in health
care spending. Employees "are paying more in premiums and deductibles as
a share of their income than ever before," and it is likely that there
is no relief in site, in spite of the enactment of the Affordable Care Act.

We desperately need public policies to correct the excessive and
increasing inequality in America, and a good start would be to replace
our current inequitable health care financing system with an
equitably-financed and more efficient single payer national health
program - an improved Medicare that covers everyone.