Thursday, January 8, 2015
The Commonwealth Fund
January 8, 2015
State Trends in the Cost of Employer Health Insurance Coverage, 2003–2013
By Cathy Schoen, David Radley, and Sara R. Collins
From 2010 to 2013—the years following the implementation of the
Affordable Care Act—there has been a marked slowdown in premium growth
in 31 states and the District of Columbia. Yet, the costs employees and
their families pay out-of-pocket for deductibles and their share of
premiums continued to rise, consuming a greater share of incomes across
the country. In all but a handful of states, average deductibles more
than doubled over the past decade for employees working in large and
small firms. Workers are paying more but getting less protective
benefits. Costs are particularly high, compared with median income, in
Southern and South Central states, where incomes are below the national
average. Based on recent forecasts that predict an uptick in private
insurance growth rates starting in 2015, securing slow cost growth for
workers, families, and employers will likely require action to address
rising costs of medical care services.
From the Overview
For workers and their family members who are insured through employers,
annual premium increases have far exceeded wage growth for more than a
decade—with premiums rising three times faster than wages. In every
state in the country, from 2003 to 2013, the total costs of insurance
premiums rose far faster than median household income.
From the Discussion
Costs per person for private insurance have risen faster than in
Medicare since 2008. Over the next decade, federal projections indicate
that per-enrollee medical spending among the privately insured will
continue to rise faster than in Medicare, increasing to an average of
4.7 percent per year from 2014 to 2023. Concerns are mounting that the
recent wave of hospital mergers and hospital acquisition of physician
practices will result in higher prices paid by private insurers,
regardless of the quality of care provided. The higher prices paid in
the United States relative to other high-income countries account for a
large portion of the share of national income that is consumed by health
care in the U.S.
Although the Affordable Care Act offers a platform from which to build,
securing a more affordable future will likely require action beyond
those reforms, focusing on costs of care, particularly for the privately
The key question is how to slow health care cost growth in a way that
benefits middle class and lower-wage working families—that is, keeping
premium growth in check without eroding benefits. This will likely
require concerted efforts that span the private and public sectors. The
challenge to policy leaders will be to pursue reforms that improve the
quality of health care, rein in cost growth, and ensure that savings are
shared with patients and families across the income spectrum.
Comment by Don McCanne
Although some news reports are celebrating the slowdown in the growth of
premiums paid by employers for their employee health benefit programs,
the news is not so good for those the coverage is designed to serve -
workers and their families. As this report states, "Workers are paying
more but getting less protective benefits."
Specifically, "the costs employees and their families pay out-of-pocket
for deductibles and their share of premiums continued to rise, consuming
a greater share of incomes across the country." Further, "Costs per
person for private insurance have risen faster than in Medicare."
Employer-sponsored health insurance - the best coverage that the private
insurance industry has to offer - is further burdening workers and their
families, yet still falls short of Medicare in its effectiveness in
containing health care spending.
Although the Affordable Care Act was specifically designed to perpetuate
the role of employer-sponsored coverage, our experience shows that the
best that the private insurance industry had to offer is still not good
enough. Medicare is certainly better, although it has problems that need
to be addressed. But it would be far easier to fix Medicare - a system
designed for patient service - than it would be to harness the private
health insurance industry - a system designed to serve business interests.
It's time to relieve employers of their responsibility of providing
health benefit programs for their employees. We need to move forward
with enacting and implementing an expanded and improved Medicare for all.
at 4:27 PM