- Middle-income families are spending more of their money on healthcare costs today than they were 10 years ago because premiums and deductibles have risen faster than income, a new report from the Commonwealth Fund found.
- Premium and deductible costs rose to $7,388, or 11.5% of income, for middle-income Americans earning about $64,000 in 2018. That's up substantially from $4,160, or 7.8% of income, in 2008. The financial burden was highest in southern states in 2018, ranging from 12% in South Carolina to 16.5% in Mississippi. The burden was the lowest in Washington at 7.7%.
- In 2018, the average total premium costs (employee and employer contributions combined) were lowest ($5,971) for single-person coverage in Tennessee and highest in Alaska ($8,432). Family coverage was most expensive in New Jersey ($22,294) and least expensive in North Dakota ($17,337).
The affordability of health insurance coverage is a key issue as the country heads into a presidential election year. By measuring the costs middle-income earners pay for employer-sponsored health insurance premiums and deductibles in all 50 states, the Commonwealth Fund study shows why this issue resonates.
High deductibles in particular have come under scrutiny because they can pose a barrier to care if people decide to forgo needed services or treatments because they can't afford the out-of-pocket costs. In these instances, people are effectively underinsured, which the Commonwealth Fund says is the case if people's deductibles are 5% or more of their income.
By that definition, middle-income earners with employer-sponsored insurance were underinsured in 18 states in 2018, the study found. Overall, deductibles accounted for 4.7% of income nationally, up from 2.7% in 2008.
Those findings are not good news for hospitals, David Blumenthal, president of the Commonwealth Fund, said during a conference call with reporters.
"When people with high deductibles use healthcare, they go home with unpaid bills. Those bills have to be collected, and often they can't be afforded by the individuals who incur them," he said.
A study the Commonwealth Fund released last year backs up his conclusion. In that report, just 46% of people surveyed said they would be able to pay a $1,000 medical bill within 30 days if they get sick or hurt unexpectedly.
Blumenthal put the blame for rising premiums and deductibles — both of which reflect prices insurers pay for healthcare services — on hospitals and health systems and their increasing market power.
In 70% of local markets, hospital ownership is highly concentrated, Blumenthal said, giving those systems the upper hand in negotiations with payers. Meanwhile, "employers are very fragmented and have very little market power," he said. As a result, "there is very little restraint on pricing." Hospital executives are motivated to increase prices to offset declining rates of inpatient utilization, particularly if they have excess capacity, he said.
To conduct the study, the Commonwealth Fund tapped into data from the Medical Expenditure Panel Survey -Insurance Component, which the Agency for Healthcare Research and Quality conducts, surveying about 40,000 private-sector employers annually. The Commonwealth Fund used median household income figures from annual surveys conducted by the U.S. Census Bureau.
To assess the burden on middle-income Americans, the group analyzed the median income and the average premium and deductible costs paid by employees in each state.