An annual survey from the Kaiser Family Foundation offers new data on healthcare vs. wages. As health benefits become more expensive for employers, data reveals it is employees who shoulder the burden with higher deductibles and out-of-pockets costs. The study found that out-of-pocket costs have risen eight times as fast as wages, and it’s not likely to adjust any time soon.
“New data from an annual survey by the Kaiser Family Foundation shows health benefits are steadily becoming more expensive for both workers and employers. As total costs increase, higher deductibles expose workers to increased financial risk when they fall ill.
‘They see the higher deductibles, and they perceive them as larger dollar amounts, and they know their wages aren’t going up that fast,’ said Gary Claxton, a vice president at the Kaiser Family Foundation, a health-policy research group.
Premiums have also increased more quickly than earnings and inflation.
In 1999, the average total premium for a family health-insurance policy -- taking in what workers and their employers paid -- was about 14 percent of median household income. By last year, that was up to 31 percent. Workers’ contributions on average reached about 9 percent of household income.”
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Employers are the largest source of health insurance in the US, and over 152 million people rely on their employers for insurance coverage. There is often talk that employers cannot pay more – Axios notes that corporate health costs are often called a crisis, but the numbers from the study do not back up this claim – and shifting the burden to employees isn’t the best option. Unfortunately, this shift does not look like it will end by the employers’ hands any time soon.
Drew Altman, also with the Kaiser Family Foundation, writes on Axios that cost shifting should reach a natural limit.
“There may be a few explanations for the perception of a health cost crisis in the corporate world. Employers have held costs down, in part, by shifting them to employees. They may now feel cost shifting is nearing a natural limit.
They get blowback about it from their employees, and most have always seen cost shifting as an expedient way to shave their annual premium increase rather than as a meaningful cost containment strategy.
- 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. Plus, health benefits still consume 7.5% of overall compensation for private sector employers — a significant share, though far less than wages (69.6%).
- The averages also conceal the fact that some employers are getting hit harder than others.
What we've seen in recent years in our employer survey is largely business as usual, with most employers deploying a grab bag of cost strategies, from cost shifting to disease management to wellness programs and more, without expressing great confidence in any one strategy. That approach is more consistent with the data showing the burden of health costs largely stable with moderate cost growth.
The bottom line: The data on corporate health costs are at odds with the rhetoric of a crisis or the sense that employers are poised to take dramatic action.”
Bloomberg notes that the employers asking workers to shoulder a greater and greater share of medical cost is a system-wide redistribution of risk that shows no signs of abating.
“Recent years have seen slower annual increases in total health-care costs than other periods such as the early 2000s, when double-digit growth was the norm. That’s good news for both companies and workers. As a share of total compensation, employer health costs have stabilized in recent years.
Claxton says the one-year increase in premiums is roughly in-line with wages and inflation. Employers may be reluctant to make big changes in their health benefits in a tight labor market, he said. The unemployment rate, at 3.9 percent, is near a 20-year low.
‘When you’re at full employment and you’re not really being stressed, that’s not the decision you want to make,’ he said. ‘You’re still out there fighting for workers.’”
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