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Deductibles soar in employer health plans

Studies: Employer Costs Slow As Consumers Use Less Care, Deductibles Soar

By Jay Hancock and Shefali Luthra
Kaiser Health News, September 14, 2016

Employer health insurance expenses continued to rise by relatively low amounts this year, aided by moderate increases in total medical spending but also by workers taking a greater share of the costs, new research shows.

Average premiums for employer-sponsored family coverage rose 3.4 percent for 2016, down from annual increases of nearly twice that much before 2011.

But 3.4 percent is still faster than recent economic growth, which determines the country’s long-run ability to afford health care.

And the tame premium increases obscure out-of-pocket costs that are being loaded on employees in the form of higher deductibles and copayments. Another new study suggests those shifts have prompted workers and their families to use substantially fewer medical services.

Since 2011, the average deductible for single coverage has soared 63 percent, according to the survey, while workers’ earnings have gone up by only 11 percent.

Change from 2011 to 2016 (from graph available at KHN link below):

6% - Overall inflation
11% - Workers earnings
19% - Single coverage premiums
63% - Single coverage deductibles, all workers

Members of high-deductible plans paid nearly a fourth of their total medical costs out of pocket versus only 14 percent for members of conventional plans.

Average annual 2016 premiums for single coverage were $6,435 for single coverage and $18,142 for family coverage, according to the Kaiser report.

http://khn.org/news/studies-employer-costs-slow-as-consumers-use-less-care-deductibles-soar/

KFF 2016 Employer Health Benefits Survey:
http://kff.org/health-costs/report/2016-employer-health-benefits-survey/

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Comment:

By Don McCanne, M.D.

Although most media attention has been directed toward health plans offered by the ACA exchanges, most individuals actually obtain their insurance through their employment, so it is important to observe what is happening there, and the news is not so good.

In the past five years, inflation has remained low and wage increases have almost doubled the rate of inflation, and that’s the good news. Medical costs have continued to increase at a rate greater than inflation, and that has contributed to the tripling of insurance premiums. But what is really disturbing is that the rate of increase in plan deductibles is ten times the rate of inflation. Ten times!

Many enrollees in the ACA exchange plans receive government subsidies to help pay for their premiums and deductibles, but those those subsidies are not available for the majority who receive their coverage from their employer (though higher-income employees unfairly benefit from tax expenditures that help pay their premiums).

Fortunately, the majority of workers and their families are quite healthy and have little need for health care. It is those families that have greater medical needs that are now facing these high deductibles. Precisely those individuals who need help paying their medical bills are the ones being punished with financial penalties for being sick (the financial penalties being high deductibles and other cost sharing).

Our geniuses in the policy community came up with the concept of incentivizing enrollment in low actuarial value plans in the ACA exchanges - the ones that require high deductibles to reduce the pressure to increase premiums. Employers have quickly latched onto that concept and are now increasing the deductibles in their plans to levels that will cause financial hardship for too many families.

Did you catch that line above? The one that says that we are assessing financial penalties against those unfortunate enough to have significant medical needs. Isn’t just suffering from medical problems enough punishment for the unfortunate? Or maybe we don’t even want them to be punished. Maybe we would prefer to help them, as other civilized societies do.

Let’s fix this system. A single payer national health program with first dollar coverage would be a great start.