Health costs = buy­ing a Corolla

Fam­ily in­sur­ance cov­er­age tops $20k a year, Kaiser says

The Morning Call - - BUSINESS CYCLE - By John Tozzi

NEW YORK — The cost of fam­ily health cov­er­age in the U.S. now tops $20,000, an an­nual sur­vey of em­ploy­ers found, a record high that has pushed an in­creas­ing num­ber of Amer­i­can work­ers into plans that cover less or cost more, or force them out of the in­sur­ance mar­ket en­tirely.

“It’s as much as buy­ing a ba­sic econ­omy car,” said Drew Alt­man, chief ex­ec­u­tive of the Kaiser Fam­ily Foun­da­tion, “but buy­ing it ev­ery year.” The non­profit health re­search group con­ducts the yearly sur­vey of cov­er­age that peo­ple get through work, the main source of in­sur­ance in the U.S. for peo­ple un­der age 65.

While em­ploy­ers pay most of the costs of cov­er­age, ac­cord­ing to the sur­vey, work­ers’ av­er­age con­tri­bu­tion is now $6,000 for a fam­ily plan. That’s just their share of upfront pre­mi­ums, and doesn’t in­clude co-pay­ments, de­ductibles and other forms of cost-shar­ing when they need care.

The seem­ingly in­ex­orable rise of costs has led to deep frus­tra­tion with U.S. health care, prompt­ing ques­tions about whether a sys­tem where cov­er­age is tied to a job can sur­vive. As pre­mi­ums and de­ductibles have in­creased in the last two decades, the per­cent­age of work­ers cov­ered has slipped as em­ploy­ers dropped cov­er­age and some work­ers chose not to en­roll. Fewer Amer­i­cans un­der 65 had em­ployer cov­er­age in 2017 than in 1999, ac­cord­ing to a sep­a­rate Kaiser Fam­ily Foun­da­tion anal­y­sis of fed­eral data. That’s de­spite the fact that the U.S. econ­omy em­ployed 17 mil­lion more peo­ple in 2017 than in 1999.

“What we’ve been see­ing is a slow, slow kind of drip-drip ero­sion in em­ployer cov­er­age,” Alt­man said.

Em­ploy­ees’ costs for health care are ris­ing more quickly than wages or over­all econ­o­my­wide prices, and the work­ing poor have been par­tic­u­larly hard hit. In firms where more than 35% of em­ploy­ees earn less than $25,000 a year, work­ers would have to con­trib­ute more than $7,000 for a fam­ily health plan. It’s an ex­pense that Alt­man calls “just flat-out not af­ford­able.” Only one-third of em­ploy­ees at such firms are on their em­ployer’s health plans, com­pared with 63% at high­er­wage firms, ac­cord­ing to the Kaiser Fam­ily Foun­da­tion’s data.

The sur­vey is based on re­sponses from more than 2,000 ran­domly se­lected em­ploy­ers with at least three work­ers, in­clud­ing pri­vate firms and non­fed­eral public em­ploy­ers.

De­ductibles are ris­ing even faster than pre­mi­ums, mean­ing that pa­tients are on the hook for more of their med­i­cal costs upfront. For a sin­gle per­son, the av­er­age de­ductible in 2019 was $1,396, up from $533 in 2009. A typ­i­cal house­hold with em­ployer health cov­er­age spends about $800 a year in out-of-pocket costs, not count­ing pre­mi­ums, ac­cord­ing to re­search from the Com­mon­wealth Fund. At the high end of the range, those costs can top $5,000 a year.

While rais­ing de­ductibles can mod­er­ate pre­mi­ums, it also in­creases costs for peo­ple with an ill­ness or who get hurt. “Cost­shar­ing is a tax on the sick,” said Mark Fen­drick, direc­tor of the Cen­ter for Value-Based In­sur­ance De­sign at the Univer­sity of Michi­gan.

Un­der the Af­ford­able Care Act, in­sur­ance plans must cover cer­tain pre­ven­tive ser­vices such as im­mu­niza­tions and an­nual well­ness vis­its with­out pa­tient cost-shar­ing. But pa­tients still have to pay out-of-pocket for other es­sen­tial care, such as med­i­ca­tion for chronic con­di­tions like di­a­betes or high blood pres­sure, un­til they meet their de­ductibles.

Many Amer­i­cans aren’t pre­pared for the risks that de­ductibles trans­fer to pa­tients. Al­most 40% of adults can’t pay an un­ex­pected $400 ex­pense with­out bor­row­ing or selling an as­set, ac­cord­ing to a Fed­eral Re­serve sur­vey from May.

That’s a prob­lem, Fen­drick said. “My pa­tient should not have to have a bake sale to af­ford her in­sulin,” he said.

Af­ter years of push­ing health care costs onto work­ers, some em­ploy­ers are press­ing pause. Delta Air Lines Inc. re­cently froze em­ploy­ees’ con­tri­bu­tions to pre­mi­ums for two years, Chief Ex­ec­u­tive Ed Bas­tian said in an in­ter­view.

“We said we’re not go­ing to raise them. We’re go­ing to ab­sorb the cost be­cause we need to make cer­tain peo­ple know that their ben­e­fits struc­ture is real im­por­tant,” Bas­tian said. He said the com­pany’s health care costs are grow­ing by dou­ble-dig­its. The At­lanta-based com­pany has more than 80,000 em­ploy­ees around the globe.

Some large em­ploy­ers have re­versed course on ask­ing work­ers to take on more costs, ac­cord­ing to a sep­a­rate sur­vey from the Na­tional Busi­ness Group on Health. In 2020, fewer com­pa­nies will limit em­ploy­ees to so-called con­sumer-di­rected health plans, which pair high­d­e­ductible cov­er­age with sav­ings ac­counts for med­i­cal spend­ing funded by work­ers and em­ploy­ers, ac­cord­ing to the sur­vey. That will be the only plan avail­able at 25% of large em­ploy­ers in the sur­vey, down from 39% in 2018.

Em­ploy­ers have to bal­ance their de­sire to con­trol costs with their need to at­tract and keep work­ers, said Kaiser’s Alt­man. That leaves them less in­clined to make ag­gres­sive moves to tackle un­der­ly­ing med­i­cal costs, such as by cut­ting high-cost hospi­tals out of their net­works. In re­cent years em­ploy­ers’ health care costs have re­mained steady as a share of to­tal com­pen­sa­tion ex­penses.

DREAMSTIME

Work­ers’ av­er­age con­tri­bu­tion to health cov­er­age is $6,000 for a fam­ily plan, not in­clud­ing co-pay­ments, de­ductibles and other forms of cost-shar­ing.

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