Health costs for people with employer-sponsored health plans rose 18 percent over the past five years, outpacing inflation and wage increases, according to a new report by Kaiser Family Foundation.
The findings reinforce a decade-long trend of rising employee health costs that is partly driven by rising deductibles. Over the past 10 years, average health spending by families with large employer health plans has grown twice as fast as wages.
“When considering the affordability of health care, it is important to put it in context with the relatively low increases in workers’ wages,” researchers wrote in a brief published Aug. 14. “Although health insurance continues to pay a large share of the cost of covered benefits, patients in large employer plans are paying more of their medical expenses out-of-pocket and contributions to their families’ premiums have increased.”
Researchers at Kaiser Family Foundation analyzed health benefit claims from the IBM MarketScan Commercial Claims and Encounters database and the foundation’s own Employer Health Benefits Survey to better understand how costs are shared between employers and employees.
Employer-sponsored health plans are considered a valuable benefit for workers because the company covers a significant share of the plan’s premium and other costs.
Last year, health spending for a family of four with employer coverage hit an average of about $22,900, a 56 percent increase from 2008. Employees paid about $7,700 of that in premiums and health care services; employers paid the rest.
But as health care costs continue to rise, employees are taking on a greater share of the burden.
On average employers paid 66 percent of employee health plan costs in 2018, down from 68 percent 10 years ago.
Growing deductibles (the amount individuals must spend out-of-pocket before the plan takes over a portion of payment) are a big piece of the puzzle. Deductibles rose 205 percent between 2007 and 2017 — 10 times faster than inflation during that time period. Deductibles now account for half of the out-of-pocket spending among people with employer plans.
The rise in health care costs is straining household budgets.
Earlier this year, the Commonwealth Fund found that millions of people with employer-sponsored health plans spend at least 10 percent of their income on health insurance.
