Good News: Your Job Offers Health Insurance; Bad News: It’s Unaffordable

Nov. 21--Americans who get health insurance through their employers are finding their coverage unaffordable as out-of-pocket expenses have outpaced earnings over the past decade, according to a new study, which shows Floridians were especially hard hit.

Florida was one of the nine most expensive states for premium contributions, which equated to 8% or more of the median income in 2018, according to a study released Thursday by the Commonwealth Fund, a New York-based nonprofit that advocates for expanded health insurance coverage.

The Sunshine State was also among the five most expensive states for the combined costs of premiums and deductibles last year -- 14% or more of median income. Premiums are fixed costs that healthcare consumers pay every month, while deductibles represent the amount a consumer must pay before his or her health insurance kicks in.

David Blumenthal, president of the Commonwealth Fund, said the majority of Americans under 65 years old -- about 164 million people -- get their health insurance through an employer, "and that insurance is less and less affordable for many of them."

"Ensuring that everyone can afford health insurance and healthcare will require policy fixes and system-wide efforts to get to the heart of the healthcare cost problem -- the exorbitant prices we often pay for healthcare in the United States," he said.

Sara Collins, vice president of the Commonwealth Fund and lead author of the report, said that premium costs flattened for a few years after the passage of the Affordable Care Act in 2010, but have recently ticked back up.

Florida saw a 3.3% increase in premium costs for single-person coverage plans in the two-year period from 2016 through 2018, compared to 2014 through 2016, according to the study. In that same time period, deductibles for single-person plans rose 7.6%.

Collins said researchers have yet to see significant drops in employer-sponsored health insurance plan enrollment, but as costs continue to rise -- and with the removal of the individual mandate to purchase health insurance or pay a fine under the ACA -- that starts to become a concern.

"The question is: if people are facing premium costs that high, at what point do they decide not to continue having insurance or electing insurance plans?" Collins said. "At what point does it become a matter of public policy to think about addressing that affordability issue?"

U.S. Rep. Donna Shalala, a Miami Democrat and former U.S. Health and Human Services secretary, said insurance plan cost increases have long been expected by large employers. She said those companies will likely try to renegotiate their insurance contracts and more tightly manage pharmaceutical costs in order to drive down costs for their workers.

"What [employers] have all done is try to manage costs down so they don't have to shift more onto their employees," Shalala said.

While she was not surprised by the report, Shalala said she is concerned about the cost increases, but added that "good employers will limit the premiums for their lower-income workers."

Under the ACA, Shalala added, employers who charge more than 9.8% of an employee's income for health insurance get a penalty, and the employee can then seek coverage through the insurance marketplace at healthcare.gov.

The report by the Commonwealth Fund raised the same point, but added, "there's a catch" -- the provision applies only to single-person policies, "leaving many middle-income families caught in the so-called family coverage glitch, where they have an expensive family plan but do not qualify for marketplace subsidies."

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