Healthcare costs for families with employer coverage have risen twice as fast as wages and three times the rate of inflation over the past decade, according to a new report.
In 2018, an average family of four with an employer plan spent $4,706 on premiums and $3,020 on cost-sharing, the Kaiser Family Foundation found. By comparison, a family of four spent $2,838 on premiums and $1,779 in cost-sharing in 2008.
That’s an increase of 67% in costs for benefits and care in those 10 years. In that same window, wages increased by 31% and the inflation rate was 21%.
During the same period, employer contributions to health benefits also increased by 51%, according to the study, rising from $10,008 to $15,159.
Cynthia Cox, vice president at the foundation and one of the study’s authors, told FierceHealthcare that the findings show that rising healthcare costs are significantly offsetting wage growth for workers, as employers pay more for coverage.
“The more employers have to spend on premiums, they have less to compensate employees through wage or salary,” Cox said. “Part of the reason you might not have gotten as much of a pay increase is your employer is spending more on your health insurance.”
Another underlying driver in the rising costs in this population is the growth of high-deductible health plans (HDHPs), the researchers said. By 2017, deductibles accounted for half of employee out-of-pocket costs, according to the study.
In 2003, deductibles made up 20% of out-of-pocket spending, while copayments accounted for 54% and coinsurance for 26%. By 2017, deductibles accounted for 51% of these costs, while copayments made up 19% and coinsurance 30%.
“People are having to pay more money upfront earlier in the year, which can cause affordability challenges,” Cox said.
However, HDHPs are losing favor with employers who are wary of continuing to shift costs to employees to address rising expenses. Employees are reaching a “breaking point” in terms of how much cost shifting they’ll accept, Cox said.
Cox said that because employers’ costs are rising even as cost shifting has increased, it’s important to take a step back and survey the broader healthcare landscape. From that perspective, the greatest cost problem is rising prices, she said.
“What is really driving this is the price of healthcare,” she said. “That is really what is causing premiums to increase as well as deductibles to increase.”