Workers, employers face higher insurance costs

BY REED A BELSON The New York Times

Family health insurance coverage for the vast majority of American workers reached an average of $27,000 this year, with little relief expected next year, according to a survey released Wednesday by KFF, a health research group.

Employers picked up about three-quarters of the cost. But workers have been sharing the burden, with sharp increases in deductibles and premiums. Employees contributed $6,850 - nearly $600 a month - toward family coverage. Many pay higher deductibles that can result in thousands of dollars in out-of-pocket costs if they become seriously ill or have an accident.

The vast majority of Americans who are younger than 65, about 180 million people, get their insurance through their employers. The rest rely on government programs such as Medicare and Medicaid, or they buy health plans through the Affordable Care Act.

The cost of employer coverage, which had been going up at roughly the same pace as overall inflation, rose sharply this year and is expected to do so again in 2026.

"We're not seeing the picture of affordability getting any better," said Lisa Hunter, the senior director of federal policy and advocacy for United States of Care, a Washington, D.C., nonpartisan advocacy group. "It's looking more and more bleak."

While companies may have the ability to pass some of their higher costs on to workers, employees have no such option, she said. "They are left holding the bag," Hunter said.

Americans already face significant out-of-pocket costs to see a doctor or for medicines. About 10% of median household income was taken up by the combined costs of premiums and deductibles for family coverage in 2023, according to a Commonwealth Fund analysis.

"People use less care, they have more medical debt that they're building, and they have more health problems because they have less care," said Sara R. Collins, a senior scholar at the Commonwealth Fund and an author of the report.

As Congress is mired in the debate over the costs of Obamacare, the private insurance market is feeling many of the same price pressures, with expensive medications, higher hospital prices and tariffs fueling costs.

"Now there is a quiet alarm bell going off," Drew Altman, the CEO of KFF, said in a column accompanying the survey of 1,862 public and private employers in the first half of 2025. He raised concerns about the potential of "a new wave of increasing deductibles and other forms of employee cost sharing." High drug prices were cited as a main factor. Nearly half of large employers with workforces of 5,000 or more cover the popular but expensive GLP-1 drugs for weight loss. The survey found that 43 percent provided coverage for them this year, compared with 28 percent last year.

And more workers than expected took the medications, which contributed significantly to higher drug costs. In an effort to limit the length of a covered prescription, a growing number of companies has imposed eligibility requirements such as meetings with a dietitian, a therapist or another professional.

Rising drug prices are particularly difficult for employers because workers simply cannot afford to pay a significant slice of the costs, said Paul B. Ginsburg, a professor of the practice of health policy at the University of Southern California. "The traditional tools of cost-sharing don't really work for these extremely expensive drugs," he said.

The survey also underscored the challenges faced by companies with fewer than 200 employees. These employers face higher premiums, and their workers frequently pay significantly more for insurance than their counterparts at large corporations - if they are even offered coverage.

More than a quarter of workers in small businesses contributed at least $12,000 a year toward premiums for family coverage. More than half had annual deductibles of $2,000 or more.

And while the vast majority of large companies offer health benefits, smaller employers have increasingly been dropping coverage. In 2025, only 54 percent of small employers with between 10 and 49 workers provided coverage.

Small employers were also experimenting with nontraditional forms of coverage, the survey found. For businesses with less than 200 employees, 37% of them took part in level-funded plans, which tend to attract businesses with healthy employees and do not cover all of the benefits required of traditional insurers.

These plans may increase the costs in the traditional market and could saddle it with "a high risk pool," where only the sickest and most expensive workers are covered, said Gary Claxton, a senior vice president at KFF.

Plans sold under the Affordable Care Act are particularly attractive to workers at small businesses. About half of the people now enrolled either work for small businesses that may not offer coverage or are self-employed, according to an earlier KFF analysis.

And a third of the small employers that do not offer coverage described Medicaid, the state-federal program for the poor, as a "very important" source of insurance for their workers, while a fifth said it was "somewhat important."

"We forget how many people on Medicaid work," Claxton said. "For those employers, those are pretty much people they don't have to cover."