A Sharp Spike – Healthcare Costs Rose 13.5%

A Sharp Spike – Healthcare Costs Rose 13.5%

Folks who are smart with their money know that every little bit counts, even down to the minute details that many people overlook. We keep an eye on the small percentages, the fees, and the tiny transactions that accumulate because we want to know where our money’s going. So, when we see a 13.5 percent increase over the course of a year for one of our most important annual expenses it’s naturally going to get us sounding the alarms.

More than half of Hoosiers (about 56 percent, on average) under the age of 65 get their health insurance through employer-provided plans. For these individuals, their total out-of-pocket costs for healthcare (employee contribution + deductible) rose by more than 13.5 percent between 2016 and 2017.

For the average Indiana worker with insurance through their job, the cost of premiums and deductibles rose by about $888 in 2017 over the previous year for a total cost of $7,462. That amounts to about 12 percent of the statewide median income.

Also, in that same timeframe, employee contributions to premium costs also increased. For single coverage the amount employees contribute went up by about 13.3 percent. For families it rose by just about 9 percent.

That’s all according to data published by The Commonwealth Fund, a New York-based nonprofit that supports research on health policy reform. Their report, titled The Cost of Employer Insurance Is a Growing Burden for Middle-Income Families, was released near the end of last year and highlighted sharp increases in the costs of employer-provided plans. Researchers used data from more than 26,000 employers to build their findings.

“The cost of employer health insurance premiums and deductibles continues to outpace growth in workers’ wages. This is concerning, because it may put both coverage and health care out of reach for people who need it most,” said Sara Collins, lead author of the report and Commonwealth Fund vice president for health care coverage and access.

Indiana isn’t alone in dealing with this problem by any means. In fact, many other states have it worse.

The report detailed that premiums for employer health plans rose sharply in nearly every state in 2017. After climbing modestly between 2011 and 2016, overall premiums for employer health plans (employer and employee share) grew more sharply in 2017, by 4.4 percent for single plans and 5.5 percent for family plans.

Annual single person premiums rose above $7,000 in eight states last year (Alaska, Connecticut, Delaware, Massachusetts, New Jersey, New York, Rhode Island, Wyoming) and family premiums were $20,000 or higher in seven states (Alaska, Connecticut, Massachusetts, New Jersey, New York, West Virginia, Wyoming) and the District of Columbia. Average premiums for families increased overall in 44 states and the District of Columbia.

What Can Be Done?

According to the authors, one of the primary factors contributing to this problem are rising healthcare prices in the U.S. which they stated were “way out of proportion to the prices of care anywhere else, reflecting the negotiating power of providers.” This is attributable to the way regional health systems have been consolidating into increasingly larger organizations, giving the consumer fewer options and little influence on pricing.

Despite the difficulties in controlling pricing, the authors did have several legislative policy suggestions that could help ease some of the costs that workers face.

“Several bipartisan policy fixes have the potential to reduce health care burdens for workers and families struggling to afford the health care they need, while also making our health system work better for everyone,” said David Blumenthal, M.D. and president of the Commonwealth Fund.

Collins said, “Policies that would reduce health care burdens on employees include fixing the Affordable Care Act’s family coverage glitch, requiring employers to exclude some services from the deductible, and increasing the required minimum value of employer plans.”

Specifically, the organization mentioned the following policy options to make employer health care more affordable for workers and their families:

  • Fixing the ACA’s family coverage glitch. (This issue has blocked many families from getting marketplace subsidies because affordability and access to subsidies are based on a single plan instead of the higher-cost family plan.)
  • Provide refundable tax credits to offset out-of-pocket costs.
  • Exclude more services from plan deductibles in employer plans.
  • Increase the required minimum value of employer plans.
  • Address rising health care costs.

In any case, it’s clear this is a multifaceted issue that’s displaying no signs of slowing down. Costs are rising and eventually many employees are going to have to be making some very difficult choices. This issue has been created from a combination of multiple complex issues occurring in tandem and will likely require a parallel set of solutions to address them all.

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Category Features, Health