Family Health Plan Costs Exceed $20k, Rise 5%

The average cost of family coverage in employer health plans pushed above the $20,000 mark for the first time this year, according to a new report, as the 5% average increase in premiums exceeded the growth rate for wages and general inflation.

Low-wage workers face unique challenges, the study found, since they are less likely to be offered employer coverage and must pay a larger share of the premium when they have the chance to buy it.

The numbers come from an annual national survey by the California-based Kaiser Family Foundation on cost trends for employer health plan coverage, the market where about 153 million Americans obtain health insurance via private-sector carriers.

It’s the single largest category of health insurance coverage in the country and has been highlighted by some Democratic presidential candidates who are proposing a “Medicare for All” system that would be run by the federal government.

“The single biggest issue in health care for most Americans is that their health costs are growing much faster than their wages are,” said Drew Altman, the foundation’s president, in a statement. “Costs are prohibitive when workers making $25,000 a year have to shell out $7,000 a year just for their share of family premiums.”

The annual survey from the Kaiser Family Foundation does not break out results for particular states, although some Minnesota employers provided information for the survey. Since 2009, average family premiums have increased 54%, according to the report. During that time period, wages grew by 26% and inflation grew 20%.

While premium costs continue to grow at a faster rate than wages and inflation, this year’s growth rate of 5% continues a recent trend of relatively moderate increase since 2012. From 2000 to 2005, annual increases tracked by the survey ranged from 9% to 13%.

Researchers noted recent polling, however, that shows 40% of non-elderly adults with employer-based coverage said that they or a family member had difficulty affording health insurance or health care, or trouble paying medical bills. Roughly one-in-two surveyed said they or a family member had skipped or postponed care or medications in the past 12 months due to costs.

“Although premium growth has been low, it still exceeds inflation, and the prices employer plans pay for care are rising faster than either Medicare or Medicaid,” researchers wrote in a summary of findings. “One side of the coin calls this a cost shift from public plans to private payers; the other sides suggests a lack of any real cost-control efforts in private plans.”

In 2019, the average annual deductible held roughly steady at about $1,655, the report found, although the number has roughly doubled from $826 a decade ago. More workers now must pay a deductible, as well, according to the report.

Nine percent of firms surveyed said the elimination of penalties for people who lack health insurance prompted fewer worker and dependents this year to enroll in coverage. The federal Affordable Care Act (ACA) included a mandate for individuals to obtain insurance, but a tax law passed by Republicans in late 2017 halted enforcement starting this year.

About 57% of employers offer health benefits and the rate has held roughly steady in recent years, according to the report. Large employers are more likely to offer coverage than small firms, which cite costs as a primary barrier.

While health insurance policies for individuals that comply with ACA rules often include “narrow networks” of doctors and hospitals to control costs, only 5% of employers surveyed said they offer a narrow network health plan.

“Negotiating lower prices means that plans have to be willing to tell higher-priced providers they cannot be in the network, but as the survey findings show, narrowing networks is both unpopular with employers and, due to dispersed workforces and rural challenges, impractical for many,” researchers wrote.

The survey was conducted between January and July and included responses from 2,012 public sector and private employers with three or more employees. Another 2,383 firms responded to a single question about offering coverage.

“Employer-sponsored coverage doesn’t come cheap for employers or workers, and many who work at low-wage firms or small business likely find it too costly to cover their families,” said Gary Claxton, a researcher at the foundation, in a statement.

Christopher Snowbeck • 612-673-4744 Twitter: @chrissnowbeck

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