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Cost sharing in employer plans increasing more rapidly

Payments for cost sharing increasing rapidly over time

By Gary Claxton, Larry Levitt, Michelle Long
Peterson-Kaiser Health System Tracker, April 12, 2016

Rising cost-sharing for people with health insurance has drawn a good deal of public attention in recent years.  For example, the average deductible for people with employer-provided health coverage rose from $303 to $1,077 between 2006 and 2015.

To look at what workers and their families actually spend out-of-pocket for services covered by their employer-sponsored plan, we analyzed a sample of health benefit claims from the Truven MarketScan Commercial Claims and Encounters Database to calculate the average amounts paid toward deductibles, copayments and coinsurance.

From 2004 to 2014, the average payments by enrollees towards deductibles rose 256% from $99 to $353, and the average payments towards coinsurance rose 107%, from $117 to $242, while average payments for copays fell by 26%, from $206 to $152.  Overall, patient cost-sharing rose by 77%, from an average of $422 in 2004 to $747 in 2014. During that period, average payments by health plans rose 58%, from $2,748 to $4,354. This reflects a modest decline in the average generosity of insurance – large employer plans covered 86.7% of covered medical expenses on average in 2004, decreasing to 85.3% in 2014. Worker’s wages, meanwhile, rose by 32% from 2004 to 2014.

Individuals in the top 15 percent of health spenders (who together account for 74.8% of total health benefit costs for the sample), had substantially higher out-of-pocket costs, averaging $2,679 in 2014, including $1,249 in coinsurance payments, $928 in deductible spending, and $502 in copays.

As of 2014, 5.5% of all enrollees had deductible payments that exceeded $1,500 and 7.8% had overall cost-sharing payments that exceeded $2,500.

A limitation of these data is that they reflect cost sharing incurred under the benefit plan and do not include balance-billing payments that beneficiaries may make to health care providers for out-of-network services or out-of-pocket payments for non-covered services.

While average payments towards deductibles are still relatively low in the context of total household budgets, they have increased quite rapidly. Deductibles are the most visible element of an insurance plan to patients, which may help explain why consumers are showing concern about their out-of-pocket costs for care. Although health insurance coverage continues to pay a large share of the cost of covered benefits, patients in large employer plans are paying a greater share of their medical expenses out-of-pocket. And, while health care spending has been growing at fairly modest rates in recent years, the growth in out-of-pocket costs comes at a time when wages have been largely stagnant.

http://www.healthsystemtracker.org/insight/payments-for-cost-sharing-increasing-rapidly-over-time/

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Comment:

By Don McCanne, M.D.

This is yet one more study that shows that deductibles and coinsurance are increasing quite rapidly in employer-sponsored health plans - plans that have been protected and encouraged by the Affordable Care Act (ACA) as they are the most common source of health care coverage in the United States. This increase in cost sharing is causing financial hardship, especially for those who have greater health care needs.

Avid supporters of ACA say that all we have to do is build on the system we have. Yet instead coverage is deteriorating, and insurers certainly show no inclination towards filling in the gaps at the cost of driving premiums further up into unaffordable ranges.

It will get worse since insurance innovations are designed to slow spending increases by directly or indirectly shifting more costs to the patients.

Under a well designed single payer system costs can be controlled without resorting to financial penalties for using care. How hot does the cauldron we are in have to get before we’re ready to jump out and go to Medicare for All?