The average healthcare cost burden for families increased from 28% to 30% of income nationally between 2010 and 2016, according to a new Leonard Davis Institute of Health Economics and United States of Care report on employer-sponsored health insurance. That includes premiums of nearly $18,000 on average.
However, the percentage varies depending on the state. Louisiana's income-adjusted cost burden topped the list at 37.1%. Minnesota was the lowest at 24.4%. The report found that half of the states were in the 27.3% to 30.5% range. The 10 costliest states were between 32.2% and 37.1%.
The burden increased in nearly all states. The only areas that saw a decrease were Minnesota, Tennessee and Texas, as well as Washington D.C. Average growth in income more than outpaced higher premiums in each of those cases.
Premiums are growing faster than incomes in most states. This means income gains between 2010 and 2016 were quickly eaten up by rising premiums.
That doesn't even factor in higher deductible and out-of-pocket expenses of recent years. The percentage of employees in health plans with deductibles jumped from 77.5% to 84.5% between 2010 and 2016. Deductibles increased on average from $1,975 in 2010 to $3,069 in 2016. Plans in New Hampshire, North Dakota and West Virginia saw deductibles more than double in that period. Payers and employers have transferred more costs onto deductibles and out-of-pocket costs in recent years, which has allowed them to keep fairly steady premiums in employer-sponsored plans.
However, the new report didn't find any connection between premium growth and deductibles. The researchers said more study is needed to figure out how higher deductibles are and are not affecting premiums.
"Our estimates suggest that healthcare premium costs are more urgently felt in some states than others, especially at the tails of the distribution. It is important to note, however, that a state's cost burden index does not necessarily reflect how all families experience healthcare costs," according to the report.
The analysis that healthcare costs are rising faster than incomes isn't a surprise. A bright spot is that there were a handful of states that saw enough income growth to offset higher premiums. But those states still saw skyrocketing costs.
An expected economic slowdown in the coming years will likely mean even more states will see a higher percentage of employees' income going to healthcare.
Hospitals have tried to contain costs, but there are signs they've reached their limit. A recent Kaufman Hall report found that hospitals are having difficulty controlling costs through labor and efficiencies. One reason is drug prices, which grew by 4% between 2017 and 2018.
Stakeholders recently offered ways to lower healthcare costs after a request from Congress. The Brookings Institution and the American Enterprise Institute provided a bipartisan response that included a tax exclusion for employer-sponsored health insurance, antitrust enforcement for healthcare consolidation, repealing willing provider and certificate of need laws, legislating against surprise billing, expanding site-neutral payments and increasing Medicare fee schedule rates for evaluation and management services. Other organizations suggested moving to a value-based care system, decreasing administrative burdens and standardizing quality measures.