Employer Health Coverage Reaches $20,000 Per Family


If you’re one of the 155 million Americans whose employer provides your healthcare insurance, you probably have no idea what it’s costing. But rest assured, you’re paying the bill – indirectly.

Anna Wilde Mathews, writing in The Wall Street Journal, says the average cost of employer health coverage offered to workers rose to nearly $20,000 for a family plan this year. This information comes from a survey of employers by the Kaiser Family Foundation. Annual premiums rose 5% to $19,616 for an employer-provided family plan in 2018.

Employers tried to blunt this increase by boosting the deductibles that workers must pay out of their pockets before insurance kicks in. This practice lets them reduce premium costs, shifting more of the cost to workers.

Nationwide, workers paid $5,547 a year on average in premiums for a family plan in 2018, according to the Kaiser employer survey. That represents 29% of the total premium cost. For an individual plan, the average total premium cost was $6,896 in the 2018 or 3% higher than last year, with workers paying 18% of the total.

ObamaCare premiums have steadily risen since implementation of the ACA in 2014. After double-digit increases for several years, next year’s rates appear to be stabilizing as this graph depicts:

This stabilizing trend was discussed in an earlier post, Healthcare Premiums Stabilizing – Finally! But this stabilizing trend for individual premiums may not be experienced by the employer-provided insurance market.

What accounts for these rising premium costs?

A report issued earlier this year by the Health Care Cost Institute, a non-profit, said that between 2012 and 2016, health spending growth tracked in insurer claims from employer-sponsored coverage “was almost entirely due to price increases,” for services including emergency-room visits, surgical hospital admissions and administered drugs. Utilization of most health care services remained unchanged or declined.

Other research linked rising health care prices to mergers that have brought together large hospital systems, often combined with an array of doctors and other types of health care providers. Mergers generally reduce competition and lead to higher prices.

Rising employer healthcare costs means employees pay more for their healthcare – and get fewer wage increases. This explains why wages have remained relatively stagnant despite the growing economy. Employers are experiencing growth in production and sales but rising healthcare costs have prevented many from passing on these increased revenues to employees.

This is more evidence that Congress must provide us with a better healthcare system that produces higher quality at lower costs. Only a market-driven system that incentivizes patients to be more pro-active about their healthcare, rewards transparency in pricing and quality in treatment, and removes government regulations that artificially drive up costs, can provide that.

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