Pension & Benefits News Health care costs increasingly eat up larger share of employees’ incomes
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Wednesday, December 11, 2019

Health care costs increasingly eat up larger share of employees’ incomes

By Pension and Benefits Editorial Staff

Many working families are spending more of their incomes on health care, according to recent research from the Commonwealth Fund. The study, Trends in Employer Health Care Coverage, 2008–2018: Higher Costs for Workers and Their Families, found that health insurance costs and deductibles have been growing faster than median income in all states over the last decade.

The survey found the following:

  • Premium and deductible costs amounted to more than 11 percent of median income in 2018. For a middle-income household earning about $64,000 a year, employer plan premiums and deductibles amounted to 11.5 percent of income in 2018. In 42 states, premiums and deductibles were 10 percent or more of the median income, compared to only seven states in 2008. In Mississippi and Louisiana, this combined cost accounted for 16 percent of household income—the largest share among states.
  • Workers’ payments for health insurance grew faster than median income over the last decade. Between 2008 and 2018, employee premium contributions grew at an average annual rate of more than 4 percent, ranging as high as 6.4 percent between 2010 and 2012. This rise outpaced growth in median household incomes, which dipped to a low of –1.5 percent during the deep recession from 2008 to 2010 and more recently, from 2016 to 2018, was 3.4 percent. For both single and family policies, the average total cost of premium contributions and potential spending on deductibles climbed to $7,388 in 2018—ranging from $5,815 in the District of Columbia to more than $8,000 in nine states (Arizona, Minnesota, Nevada, New Hampshire, New Jersey, North Carolina, South Dakota, Texas, and Virginia).
  • Rising deductibles leave workers and families exposed to high out-of-pocket costs. In many states, workers are saddled with high deductibles relative to their income. Across the country, the average deductible for a middle-income family amounted to 4.7 percent of income in 2018—up from 2.7 percent in 2008. In 18 states, average deductibles were 5 percent or more of median income and as high as 6.7 percent in Mississippi.
  • Workers’ premium contributions consume nearly 7 percent of median income, up from 5 percent a decade ago. In 2018, employees contributed about 21 percent of overall premium costs for single plans and 28 percent of costs for family plans. But in some states, the share was higher—as much as a third of family plan premiums, on average, in Louisiana, Mississippi, Nevada, North Carolina, and Virginia. Worker contributions to single plan premiums averaged $1,427 in 2018 — with a low of $755 in Hawaii and a high of $1,903 in Massachusetts. Contributions to family plans averaged $5,431 in 2018 and ranged from $3,862 in Washington to $6,597 in Virginia.

SOURCE: https://www.commonwealthfund.org/publications/2019/nov/trends-employer-health-care-coverage-2008-2018

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