Employer Plans Shine a Light on the Full Cost of Health Care
By Stacie Dusetzina, PhD
October 30, 2020
Earlier this month the Kaiser Family Foundation (KFF) published the findings from its annual Employer Health Benefits Survey. The survey (which was conducted from January to July as the pandemic was unfolding) provides a great overview of how much money is spent on health insurance for the approximately 157 million people with employer-sponsored insurance and how generous – or not so generous – plans are today in comparison to prior years.
One of the most important pieces of information in the survey is the average premium paid for a health insurance plan. This year, KFF found that across all plans, workers paid $1,243 for single coverage and $5,588 for family coverage — an increase of 13% since 2015 and nearly 40% since 2010.
Deductibles are also on the rise. For all enrollees – regardless of the type of health plan they choose – 83% now have an annual deductible, and the average deductible was $1,364 this year. In contrast, in 2010 only 70% of workers were in plans with deductibles, and the average deductible was less than half of that faced by workers today ($646 in 2010 versus $1,364 in 2020). Workers in small firms typically had higher premiums and higher cost sharing than workers in larger firms. For example, 42% of workers in small firms had a deductible of $2,000 or more versus only 20% in large firms. This all boils down to the fact that many insured people have to pay thousands of dollars out-of-pocket before they can get most care.
Another data point I find helpful from this report is that 67% of workers are in self-funded plans, up from 61% last year. Why does this matter? Well, self-funded plans are exempt from many state health reform laws due to the Employee Retirement Income Security Act (ERISA), and with Congress being more competitive than collaborative these days, states are having to take it upon themselves to tackle important issues like improving access to prescription drugs through cancer parity laws and specialty drug spending caps. The growing number of self-funded workers is a signal that, even if successful, state laws pertaining to commercial health plans will have limited reach until Congress steps up to provide widespread relief.
I think one reason I find this report so interesting is that it highlights how much we’re all truly spending on health insurance coverage. Most of us probably don’t spend much time thinking about our total premiums — paid by us and our employer — which were $7,470 for an individual and $21,342 for a family. Those numbers are up 22% since 2015 and 55% since 2010, and it makes me wonder whether wages might have increased or whether businesses could have expanded if they were spending less money on health insurance coverage. It also makes me wonder how much higher these premiums and deductibles might climb in the years to come.
Stacie Dusetzina is an associate professor of health policy at Vanderbilt University School of Medicine and a member of the 2021 Tradeoffs Research Council. Her research focuses on measuring and evaluating the costs of prescription drugs.