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Commonwealth - Workers paying more but getting less

State Trends in the Cost of Employer Health Insurance Coverage, 2003–2013

By Cathy Schoen, David Radley, and Sara R. Collins
The Commonwealth Fund, January 8, 2015

Abstract 

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 insured.

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.

http://www.commonwealthfund.org/~/media/files/publications/issue-brief/2...

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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.