Employer-sponsored health insurance increasingly unaffordable, study finds

Median household income has not kept pace with health insurance costs, creating a financial squeeze for working families who are paying a growing share of their income for plans with less coverage, according to a new report by the Commonwealth Fund.

The report paints a sobering picture of how employer-sponsored health insurance — which covers the majority of Americans under age 65 — is becoming increasingly unaffordable for middle-income families.

Premiums and deductibles are rising, and workers are spending a growing share of their income on insurance. Meanwhile, wages have grown at a much slower rate, meaning families are stretching their paychecks to pay for care or, worse, making difficult decisions about whether they can afford it.

“As your deductible increases, you’re less likely to get needed care, to fill prescriptions you need, to go to the doctor when you’re sick. These [deductibles] act as a financial barrier to care,” said Sara Collins, a vice president at the Commonwealth Fund and lead author of the report.

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The report is based on an analysis of the Medical Expenditure Panel Survey-Insurance Component, a federal survey of more than 40,000 private-sector employers about their health insurance plans in 2018.

Premiums and deductibles accounted for about 10% of workers’ income in Pennsylvania and New Jersey in 2018. A decade earlier, these costs accounted for 6.3% of income in Pennsylvania and 5.8% of wages in New Jersey.

Nationally, workers spent an average of 11% of their income on premiums and deductibles in 2018, though in some states, insurance costs ate up as much as 16% of wages.

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Rising deductibles are largely responsible for driving up employees’ share of health-care costs.

The average deductible for an employer-sponsored health plan in 2018 was $2,711 in Pennsylvania and $3,164 in New Jersey.

That’s far less than the out-of-pocket costs attached to individual health plans through the Affordable Care Act marketplace, where deductibles can exceed $6,000 for individual coverage.

But as deductibles rise and account for a growing portion of wages, families with employer health plans risk being “underinsured,” meaning they are unable to afford health care because of the out-of-pocket costs they will be responsible for until their deductible is met.

Collins and David Blumenthal, president of the Commonwealth Fund, said the report’s findings should be a call to action for federal lawmakers.

“Ensuring that everyone can afford health insurance and health care will require policy fixes and system-wide efforts to get to the heart of the health-care cost problem — the exorbitant prices we often pay for health care in the United States,” Blumenthal said in a statement.