Cost of Employer-Provided Healthcare Passes $20K Per Year

The average cost of employer-provided health insurance has surpassed $20,000 for a family plan, a new survey by the nonprofit Kaiser Family Foundation (KFF) revealed. The KFF Employer Health Benefits Survey was released on September 25.

In 2019, annual premiums increased five percent to $20,576 for an employer-provided family plan, the yearly analysis reported. The report noted that workers’ wages increased 3.4 percent and inflation rose 2 percent over the same time period.

Employers pay, on average, approximately 71 percent of employer-provided plans, while employees are responsible for the rest.

Average family premiums have seen a 54 percent increase from 2009, according to the report. During that time, workers’ contributions have risen 71 percent, compared to a 26 percent increase in wages and 20 percent rise in inflation over the past 10 years.

“The single biggest issue in health care for most Americans is that their health costs are growing much faster than their wages are,” KFF President and CEO Drew Altman said in a statement. “Costs are prohibitive when workers making $25,000 a year have to shell out $7,000 a year just for their share of family premiums.”

In 2019, 82 percent of covered workers have a deductible as part of their plans, compared to 63 percent a decade ago. The cost of the average single deductible has also doubled, from the $826 average ten years ago to the current average of $1,655.

The KFF report found that 28 percent of insured workers now have plans with a deductible of $2,000 or higher. This is nearly four times more people than those who faced such deductibles in 2009. 13 percent of these covered workers have deductibles of at least $3,000.

Companies with many lower-wage workers tend to offer health benefits to smaller shares of their employees and force those employees to pay higher shares of premiums, the report stated. KFF found that 66 percent of workers at lower-wage companies offering benefits are eligible for them, compared to 81 percent who are eligible at other companies.

Firms with many lower-wage workers saw lower family premiums, an average of $17,633, or 15 percent less than the average at other companies. Although family premiums are lower, workers in these firms pay larger shares and have higher annual family contributions. “Employer-sponsored coverage doesn’t come cheap for employers or workers, and many who work at low-wage firms or small business likely find it too costly to cover their families,” Gary Claxton, a KFF senior vice president and lead author of the study, said in a statement.

As a result, fewer employees at lower-wage firms take advantage of their employer’s health benefits.

“Health-care affordability is generally the No. 1 issue for voters,” Dan Mendelson, founder of a healthcare consulting firm and former federal official, told The Wall Street Journal. “The issue is the costs that consumers actually see, including deductibles, copays and the cost of prescription drugs.”

Healthcare has become a key topic among candidates vying for the Democratic presidential nomination. In July, Senator Kamala Harris (D-Calif.) released an ambitious healthcare proposal that would give all Americans access to the Medicare system, expand access to telehealth, and give the Secretary of Health and Human Services the power to negotiate for lower prescription drug prices.

Harris’ plan differs from that of more progressive candidates, including Senators Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.). Both candidates support a version of Medicare for All that would grant all Americans public healthcare.

Warren’s plan noted that the basic business model of insurance companies is “to take in as much money as you can in premiums and (pay) out as little as possible in healthcare coverage.” She added that families are then stuck paying rising premiums, high deductibles, and “fighting with insurance companies to try to get the healthcare that their doctors say they and their children need.”

Leading Democratic contender Joe Biden, meanwhile, wants to allow Americans the option to buy into a public program such as Medicare.

The KFF annual employer survey was conducted between January and July 2019. The survey included 2,012 randomly selected, non-federal public and private companies with at least three employees. Another 2,383 firms were asked to respond to a single question survey about healthcare coverage.