The attractiveness of employer-based health insurance, often considered the gold standard of coverage, may be starting to wane.
New data show employees are paying much more in monthly premiums and out-of-pocket costs in every state for such plans while wages remain stagnant. In Florida, for example, 12.4% of an employee's average median income went toward premiums and deductibles in 2013—the highest percentage of any state. That's up from 6.7% in 2003.
Nationally, 9.6% of an employee's household income was spent on premiums and deductibles, compared with 5.3% in 2003.
The data come from a new Commonwealth Fund report released Wednesday. The report drills down into specific state-by-state results for employer-sponsored insurance and plays off the organization's observations from December.
Previously, the healthcare think tank found more working Americans are spending more of their paychecks on healthcare despite the moderation in premium increases and the overall cost of healthcare in the past several years.
“Workers and their families are not yet seeing benefit from these changes,” Dr. David Blumenthal, president of the Commonwealth Fund, said on a call with reporters.
Employees are in a financial hard place for two reasons. First, their salaries are barely increasing. True, the Commonwealth Fund found the rate at which premiums and deductibles rose had “slowed markedly” between 2010 and 2013. Specifically, when it came to premium growth, 31 states and the District of Columbia recorded lower growth rates from 2010 to 2013 than they saw from 2003 to 2010. But salaries and wages are rising at an even slower pace. That means workers have to spend a larger portion of their incomes on healthcare.
Additionally, high-deductible health plans have morphed into the default for a growing number of employers. “High deductibles are now the rule, not the exception,” said Cathy Schoen, executive director of the Commonwealth Fund's council of economic advisers.
More than 4 in 5 employees had a high-deductible plan in 2013, up from half in 2003. The amount of the deductible, which is what an employee must pay out of pocket before the health plan kicks in, has similarly risen dramatically. The average deductible in 2013 was $1,169, an increase of 159% from 2003.
In 2013, only three states (Alabama, Arkansas and Hawaii) and D.C. had average deductibles that were less than $1,000. Seven states—Connecticut, Maine, Montana, New Hampshire, South Dakota, Texas and Vermont—had average deductibles exceeding $1,500. In 2003, no large employer in any state had an average deductible greater than $750.
“These are very high costs,” Schoen said. “Families are having to make a very tough decision.”
The shift toward more employee cost-sharing made a large splash this week after the New York Times reported on Harvard University's new health benefits approach. Starting this year, Harvard employees will have to pay an annual deductible of $250 for individuals and $750 for families. They previously had no deductible.
Harvard faculty criticized the university's decision, arguing that the cost-shifting wasn't warranted and was “equivalent to taxing the sick.” However, Harvard's plan is still far more generous than most other employer plans across the country and in its home state. In 2013, the average annual deductible for a single person at a large employer in Massachusetts was $1,049, or more than four times as high as in Harvard's plan, according to the Commonwealth Fund data.
Follow Bob Herman on Twitter: @MHbherman
