Aug 16, 2019

The growing employer health care crisis

Caitlin Owens, author of Vitals
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Reproduced from Peter-Kaiser Health System Tracker; Chart: Axios Visuals

The past decade has seen enormous growth in health care costs paid by both employees and employers, creating the context for some of today's biggest political debates as well as teeing up more problems for the future.

Yes, but: There are some signs that employers have maxed out their ability to shift costs to employees.

By the numbers: Health spending by families who get their insurance from large employers has grown two times faster than wages over the last decade, driven partially by the rise in deductibles, according to a new brief by the Kaiser Family Foundation.

  • Employees' average costs for family coverage rose from $1,779 in out-of-pocket spending and $2,838 in premiums in 2008 to $3,020 and $4,706, respectively, in 2018.
  • But it's not like employers' costs have remained stable over the same time period: Their premium contribution has risen, on average, from $10,008 to $15,159.

Why it matters: People are paying higher premiums for insurance that leaves them on the hook for more of their bills.

  • Rising deductibles "has worsened inequality, fueling anger and resentment and adding to the country’s unsettled politics," the LA Times' Noam Levey recently reported in a series on high deductibles.
  • It's also fueled the debate over prescription drugs, which have become more expensive as patients become more exposed to their cost. That's been especially hard on chronically ill people, and "has made being sick in the U.S. dramatically more expensive," Levey reported.
  • The realization that the Affordable Care Act's coverage gains did little to make a dent in the cost of care for many Americans is part of the rationale behind Democrats' leftward march, and the most radical form of Medicare for All would completely eliminate premiums and cost-sharing for everyone.

What we're watching: There are signs that the system is nearing a breaking point.

  • Another analysis of employer-sponsored health insurance by the State Health Access Data Assistance Center found that deductibles remained stable, on average nationally, between 2017 and 2018 — a big change from the steady increase of previous years.
  • However, "it is likely too soon to say if 2018 data represents a break in the long-running growth in [employer insurance] deductibles or just a temporary pause," the authors cautioned.
  • There have also been predictions that 2020 will be the year that employers start fighting back against high prices.

The bottom line: Eventually things will change, because they have to. The current trajectory isn't sustainable.

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