Although we often focus on the Affordable Care Act’s Medicaid expansion and insurance exchanges, it’s important to remember that the majority of people in the United States still get their coverage from employer sponsored health insurance.
To put things in perspective, it’s worth remembering that less than 7 million people, or 2% of Americans, are covered by insurance exchange plans. Even when we hit the CBO projected 25 million people in a few years, that’s still less than 10% of nonelderly people in the United States.
Employer sponsored plans, however, cover more than 150 million people, or almost 60% of the non-elderly US population. They shouldn’t be forgotten when we discuss what’s happening with spending and reform. Recently, the Commonwealth Fund published a report which allows us to discuss what’s going on with such insurance - “National Trends in the Cost of Employer Health Insurance Coverage, 2003-2013”.
Confirming what we’ve seen from Kaiser Family Foundation data, the average family plan cost (in premiums) more than $16,000 in 2013, up 73% from 2003. Single coverage cost, on average, more than $5500, and has gone up 60%.
Many predicted that the regulations that forced family plans to start allowing children to stay on them until age 27 would force premiums to go up more than normal. But, along with overall health care spending, premiums have risen more slowly on average since the ACA was passed (4.1% per year) than before it was passed (5.1% per year). In the last few years, plans at large firms grew more slowly than those at small firms (4.0% versus 4.3%).
A concerning trend, however, has been that even though premiums have been increasing more slowly than before, they are still increased faster than family income. Remember that premiums rose 73% for families in the decade 2003-2013. In that same time period, median family income only rose 16%. That means that while premiums cost families only 15% of their income in 2003, they cost families 23% in 2013.
While most economists would argue that, in the end, employees bear the full costs of their insurance plans, the direct contributions of employees have only increased as well. In 2003, employees contributed 17% of their premium costs; in 2013, this rose to 21%. Such contributions rose from 2% of income to 4% of income over that period.
I recently wrote about underinsurance over at The Upshot, and the contributions that higher deductibles play in that discussion. Even in employer sponsored plans, that applies. Deductibles more than doubled from 2003 to 2013. In fact, in 2003, just over half of employer sponsored plans had a deductible at all. In 2013, that number had risen to more than 80%. The deductible for a family in a small firm averaged $3761 in 2013. In a large firm, it was still $2307.
In 2013, the average deductible for a single person plan was 5% of median income. That’s the definition of underinsurance. That means the average person getting an individual plan from an employer in 2013 was underinsured.
That’s on top of premiums, and also doesn’t include other forms of cost-sharing like copays and co-insurance.
There’s a lot of good news in the reports of recent health care spending slowdowns. There’s also good news in the reduction of the number of Americans who are uninsured. But we shouldn’t neglect the majority of Americans who get their coverage through employer sponsored plans. Many, if not most, are still exposed to large out of pocket spending, and they’re paying a lot of money in premiums. There’s still a lot of work to do to get this under control.