Health insurance now costs average family $16,000

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Health insurance now costs average family $16,000
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A new survey has found that health insurance for the average family now costs about $16,000, with employees paying more than 25 percent of that amount, although premiums for job-based family coverage have increased only 4 percent.

These figures reveal a deceleration in health spending, according to a survey of 2,000 employers released Tuesday by the Kaiser Family Foundation and the Health Research & Educational Trust.

Despite slowed down health spending, most workers are still likely to feel the squeeze in their pocketbook due to health care costs. Indeed, more than 30 percent of them have at least a $1000 annual deductible they have to pay this year before the insurance company will cover any health costs – this, in spite of the fact that the cost for health insurance continues to outgrow the amount people are earning in wages each year.

As the survey found, the cost of premiums for the average family reached $16,000 for the first time. Employees are paying an average of $4,565 toward that cost, and according to the survey, that amount doesn’t include the cost of copayments and deductibles.

As the survey also found, the average single worker’s insurance premiums increased 5 percent to a cost of $5,884, with the worker paying an average of $999 of that premium cost. Yet, the amount of wages earned by employees only rose an average of 1.8 percent, with general inflation increasing 1.1 percent, which illustrates how slow the growth of wages is compared with the rise in health insurance costs.

“The premium increase this year is very moderate, but the pain factor for health insurance cost has not disappeared,” said Drew Altman, president and CEO of the foundation. “Over time, what people pay for health care has dramatically eclipsed both their wages and inflation.”

From a historic standpoint, the increased premium amounts found in the survey are relatively modest. However, the ongoing debate over the new federal health care law raises serious questions regarding the claim that Obamacare will lower health care costs.

Consider what happened last July, when the Obama administration made the surprising announcement that it was granting employers with over 50 workers a one year delay to fulfill the requirement to offer workers health insurance coverage or pay a fine. That announcement resulted in Republicans asking for a similar delay for the requirement that most individuals have to carry health insurance coverage.

Regardless of which side of the Obamacare fence you’re on, this new survey will likely only further spark debate amongst both critics and supporters alike, according to Paul Fronstin, director of the Health Research and Education Program at the Employee Benefit Research Institute, a nonpartisan Washington think tank.

“You will have the administration and the Democrats saying, ‘Look how the health law is helping moderate health cost increases,’ and Republicans and those against the law will say, ‘It hasn’t done anything because costs are still four times inflation,’ ” explained Fronstin.

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Meanwhile, the survey also found that 93 percent of companies with over 50 employees offer coverage, which is slightly lower than last year’s 95 percent, while 57 percent of all companies offer health insurance coverage to their workers, which is down from 66 percent 10 years ago.

As with total premiums, the share of the premium contributed by workers varies considerably among firms.

The Kaiser Family Foundation survey reports that for single coverage, 62% of covered workers are in plans that require them to make a contribution of less than or equal to a quarter of the total premium, 2% are in plans that require a contribution of more than half of the premium, and 14% are in plans that require no contribution at all.

For family coverage, 42% of covered workers are in plans that require them to make a contribution of less than or equal to a quarter of the total premium and 14% are in plans that require more than half of the premium, while only 5% are in plans that require no contribution at all for family coverage.

“One of the changes in this report is the growth in deductibles,” said economist Paul Ginsburg of the Center for Studying Health System Change, a nonpartisan research group in Washington. The deductibles were likely “a factor behind the premium increase being as low as it was.”

In small firms with 3 to 199 workers, employees have an average annual deductible of $1,715 versus $884 for those in larger firms.

Some employers believe that changes related to the new federal health law, such as the provision that allows adult children to remain on their parents’ health insurance plans until they reach the age of 26, are further creating additional costs.

“We’re all seeing it,” said Forrest Cook, vice president of human resources at NCP Solutions, a 350-employee company in Birmingham, Ala. “We have around a 5 percent to 6 percent increase this year. Before that, our costs held steady for about three or four years.”

Another factor that will affect the future of the federal health care law is the emergence of new exchanges, or marketplaces, where an employer can provide workers with more health plan options. Exchanges also facilitate the use of defined contributions or other strategies that encourage employees to choose lower cost plans or pay the difference in costs themselves.

“While these approaches are new and differ across different exchanges, the common theme is to devolve some benefit choices, and some of the financial responsibility for those choices, to employees,” concludes the report. “Whether this new way of purchasing coverage works for employers and their employees, and how it affects benefits and plan costs, will be among the more important stories for the employer health insurance market over the next few years.”

SOURCE: Kaiser Family Foundation/Health Research & Educational Trust (HRET), “2013 Employer Health Benefits Survey,” published August 20, 2014.

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