This time of year, we tend to see a lot of press around the rising costs of health care in the US. The prestigious Kaiser Family Foundation notes that “Annual premiums rose 5% to $19,616 for an employer-provided family plan in 2018.”
That sounds scary – I know my salary did not go up 5%. So, I’m taking home less pay, right? Well, yes and no.
In another recent article, Kaiser Family Foundation’s Drew Altman notes that, at least recently, there is no crisis. Here’s his chart showing how health care, as a portion of total compensation, has fared over the last decade or so:
There is definitely an increase over the last few years, but it may not be as bad as it seems. However, as Altman notes, “Even if health costs have not been growing recently as a percentage of compensation, there still can be sticker shock, with the average cost of a family policy around $19,000 per year, about the cost of a Honda Civic.” Yikes!
What this graph and his analysis has not captured is the cost shifting that has happened to a lot of US workers over this time. We’ve seen the growth of high deductible health plans and rising PPO deductibles and other cost shifting such as eliminating copayments or adding additional tiers of coverage for specialty medications.
So, while the premiums as a percentage of total compensation have been steady over the past few years, I know that many people who require some basic level of health care treatment are feeling much more of an impact at the point of sale.
The first Kaiser article cited above also notes “The average 2018 general deductible for individual-worker coverage was $1,573, according to the survey, up from $1,505 last year and $1,135 five years ago. Those averages don’t include plans that lacked such deductibles.” Here’s the chart showing the rise in the annual deductible over the past decade or so:
So, while premiums and employer costs may not feel like a crisis, health plan consumers, your employees, are absolutely feeling the crisis. We’re expecting employees and their families to pay for a lot of their health care costs (and those costs keep growing, as well) and that trend is definitely unsustainable.
Without this cost shifting, the total compensation chart above would look very different. So, unfortunately, I think the crisis is real!