Report finds huge increases in health insurance costs

Dec. 12--A report released last week by the Commonwealth Fund shows that nationwide the costs of employer-sponsored health insurance continue to rise faster than workers' wages.

"The vast majority of people under age 65 in the U.S., 152 million, get their health insurance through an employer, and many of them can barely afford to pay for it," said Dr. David Blumenthal, president the Commonwealth Fund, which is a private foundation.

While workers and their families in the Southern states shouldered the biggest share of the cost, Massachusetts employees saw premiums skyrocket and deductibles climb as well. The Bay State was one of eight states where single-person premiums on employer-sponsored plans rose above $7,000 and one of seven states where family premiums were $20,000 or higher in 2017.

The Massachusetts premiums of $7,031 and $21,053 in 2017 represented increases of 6.2 percent and 11.1 percent from the previous year.

It's a problem that is particularly acute locally.

"If anything, premiums rose a bit more on the Cape," said John Turco, senior vice president of employee benefits for Rogers & Gray Insurance.

Cape Cod Chamber of Commerce CEO Wendy Northcross said her organization saw health care premiums increase almost 24 percent in fiscal 2018.

Worker contributions rose, too.

Massachusetts residents on single-person health plans sponsored by their employers had the highest premiums in the nation at $1,747, while the employee premium contribution for family coverage in Massachusetts was $5,571, a 10.3 percent increase from 2016 to 2017.

Deductibles also rose in Massachusetts, going from $1,391 in 2016 to $1,479 in 2017 for employer-sponsored single plans.

That was less than the national average of $1,808 for single-plan deductibles and contributed to the finding that potential out-of-pocket costs in Massachusetts consumed less of residents' median income -- 8 percent -- than the national average, which showed the potential costs ate up 12 percent of Americans' median income.

"In Louisiana and Mississippi, these combined costs rose to 15 percent or more of median income," according to the report.

The Commonwealth Fund's mission "is to promote a high-performing health care system that achieves better access, improved quality and greater efficiency, particularly for society's most vulnerable, including low-income people, the uninsured and people of color," according to its website.

Northcross said that in annual surveys, "the cost of health insurance continues to rank in the top three issues of concern for Cape businesses."

"Most of the Cape is in the small-business segment" with 1 to 49 employees that is a "bit more volatile" than larger group markets, Turco said.

"We are seeing consistent double-digit increases in the small- and mid-size markets, with some good stability in the larger groups" of 100 or more employees enrolled, Turco said.

"Employers are continually increasing the employee share of the premium at the rate of about 6 to 10 percent per year," Turco said.

The Cape Cod Chamber of Commerce saw its premiums increase nearly 23.5 percent from fiscal 2017 to fiscal 2018, Northcross said. The chamber got a break in the premium cost this fiscal year, 2019, when the increase was only 0.6 percent, but deductibles continue to climb, Northcross said.

The increases have cut into the chamber's budget and affected staffing, Northcross said.

"We've not been able to replace a recent retiree because the increases are the same as one person's annual wages," Northcross said.

Rising premiums are not associated with better coverage, Collins said in a Thursday teleconference about the Commonwealth Fund report.

Private employer plans are covering fewer services, Northcross said.

Individuals whose employer-subsidized health insurance costs consume too much of their income are allowed to apply for subsidized care, either through MassHealth or subsidized Connector Care coverage.

"Our employees ... feel the state plans are better in terms of benefits than the Neighborhood Health Plan we currently offer," even though the chamber helps cover part of the cost of deductibles under some circumstances, Northcross said.

In Massachusetts, so many employees have moved from employer-sponsored to government-subsidized plans that the state charges employers a supplement, called the Employer Medical Assistance Contribution, up to $750 a year for each employee on MassHealth and subsidized ConnectorCare programs.

Even more employees could get financial relief by going on subsidized plans if Congress were to fix something called the "family glitch," Collins said.

Employees are eligible to leave employer-sponsored healthcare programs for subsidized coverage if their employee insurance costs are above 9.5 percent of their income, Collins said.

But the threshold formula only looks at the cost of insurance for the individual employee via a single plan, without taking into consideration the fact the employee may be paying much higher costs to get coverage for a family, Collins said.

"It's the cost of the insurance for the individual, not the premium they pay" to cover a family, Collins said.

If Congress would fix that, "it would really help a lot of people," Collins said.

Massachusetts has one of the highest rates of insured residents in the nation, at 97 percent. But the state struggles with high health costs that also help drive up premiums, Collins said.

The consolidation of hospitals and physician organizations and other services means the providers of health care services have less competition, another factor in higher prices, Commonwealth Fund researchers said.

-- Follow Cynthia McCormick on Twitter: @Cmccormickcct.

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