While an employer-sponsored health insurance plan can make the cost of health care more affordable, families are still having to dig deeper into their pockets to pay for health care costs than in the past, new research suggests.
Two nonprofits focused on health care issues — the Henry J. Kaiser Family Foundation and the Peterson Center on Healthcare — partnered to research how out-of-pocket health care costs are affecting families across the country. To glean their insights, they looked at a sample of medical claims supplied by large employer plans in the IBM MarketScan Commercial Claims and Encounters Database. The claims were from the years 2003 through 2017. Researchers also compiled information on workers’ wages from the Bureau of Labor Statistics Occupational Employment Statistics, and referred to the Kaiser Family Foundation’s Employer Health Benefits Survey.
In the process, they learned family health care spending is growing at a faster rate than average wages. When it comes to paying for care, employees and employers typically split the bill. In addition to paying a portion of the premiums, employees often are responsible for cost-sharing fees such as deductibles, co-payments and coinsurance as dictated by their particular plan.
The data showed that the average family spent $4,706 on premiums and $3,020 on cost-sharing payments in 2018. The total — $7,726 — marks an 18% increase in health care costs taken on by the average family from the year 2013, when total costs were $6,571.
Not only are families paying more for health care expenses, but the costs are likely taking a larger toll on their budgets than in years past because salary increases aren’t keeping up with the rising costs, the data showed. In fact, the 18% increase in health care costs was significantly higher than the 8% increase in inflation and the 12% increase in average employee wages over the same five-year period.
The increase in health care spending can be seen more starkly when looked at over the past decade, as out-of-pocket spending by families has increased a whopping 67% — from $4,617 to $7,726 — during that time frame.
The percentage of health care costs that employees are responsible for has changed only slightly in the past 10 years. On average, employees at large companies are responsible for 34% of the costs for insuring themselves and their families while employers typically pay the rest. Ten years ago, the average family was responsible for about 32% of the total cost. In 2018, the average worker paid about 20% of the total cost in premium contributions and 13% through cost-sharing payments.
Health insurance is such a major cost for most families that it’s hard to do any financial planning for the future without considering its impact. Not only should you have an idea of the average cost of health insurance in your state, but you should know how different factors affect the cost of health care, such as your age. The more information you have, the better equipped you will be to choose the right health insurance plan for your family.