Employee healthcare costs continue to rise as premium and deductible hikes exceed wage growth

Health cost transparency
Employee healthcare costs have consistently outpaced wage growth over the past decade, reducing the average American's buying power overall. (Getty/cyano66)

Premiums in employer-sponsored healthcare plans continued their seven-year trend upward, widening the gap between employee healthcare costs and wages.

Family plans saw premiums rise 5% this year to an average of $19,616, while individual premiums increased 3% to $6,896, according to Kaiser Family Foundation.

KFF's Employer Health Benefits survey, released on Wednesday, noted that these premium hikes are close to, but still larger than, workers' wage increases and inflation—2.6% and 2.5%, respectively. Such increases have consistently outpaced wages and inflation, reducing employees' buying power overall.

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Premiums rose twice as fast as workers' earnings and three times as fast as inflation in the 10 years since 2008.

“Health costs don’t rise in a vacuum. As long as out-of-pocket costs for deductibles, drugs, surprise bills and more continue to outpace wage growth, people will be frustrated by their medical bills and see health costs as huge pocketbook and political issues,” KFF President and CEO Drew Altman said in a release.

Deductibles have grown even faster than premiums. KFF noted that average deductibles grew eight times faster than wages since 2008.

Furthermore, a greater share of workers have a deductible than ever before—and those deductibles are creeping upward. In 2018, 85% of workers had a deductible in their plan, up from 81% in 2017 and 59% in 2008. More than a quarter of covered workers have a deductible greater than $2,000.

“Deductibles of $2,000 or more are increasingly common in employer plans, which means the bills can pile up quickly for workers who require significant medical care,” lead author Gary Claxton, KFF VP and director of the Health Care Marketplace Project, said in the release.

The vast majority of Americans, some 152 million, receive healthcare through their employers, so annual hikes take a toll on the nation's economy. With healthcare cost increases consistently outpacing wage increases, most workers receive a de facto pay cut every year, even if their stated income doesn't reflect that. Given this reality, many large employers are beginning to offer programs to bring healthcare costs down.

RELATED: Survey: Per-employee healthcare costs expected to increase 4.1% in 2019

Kaiser found that 57% of employers offer healthcare benefits of some kind and 21% offer to integrate information from employees' devices (such as a Fitbit or Apple Watch) as part of a wellness program.

Meanwhile, some employers would simply prefer not to insure their workers at all. Kaiser found that 13% of employers offer financial incentives for enrolling in a spouse's plan, and 16% offer incentives for opting out of the employer plan one way or another.

And because the 2017 tax law removed the individual mandate, 10% of all offering companies, and 24% of large ones, said they expect fewer workers and dependents to enroll.

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