Coverage Costs Climb In Employer-Based Plans, Study Finds – The Lund Report

The average cost of coverage for Oregonians who receive health insurance through their employer has held steady as a share of median income over the last decade, even as average costs around the country have gone up, a new study found. 

Issued by The Commonwealth Fund, the study used data from a federal survey of health plans to calculate average premium and deductible payments made by workers in each state. It also compared these costs to each state’s median income between 2010 and 2020.

It found workers in 37 states, including Oregon, are paying 10% or more of their median income for health insurance through their employers. That’s up from 10 states in 2010. 

Between then and 2020, the average national cost of employee health insurance grew by 72.1%, significantly outpacing median income, which grew 35.7% during the same period.

As the overall cost of employer-sponsored health insurance premiums grew between 2010 and 2020, the share families paid for coverage also increased, growing from 27% to 29%. The percentage that workers pay for individual coverage remained steady at 21%. 

Additionally, the study found that the lower the average wages were at a company, the higher the share of the total cost was borne by workers. This meant the poorest quartile of Americans paid 26.3% more for family coverage than the wealthiest. 

Employer health insurance covers about 163 million people in the U.S. or more than half of Americans under age 65. That is consistent with Oregon where 49.3% of people got insurance through their employer, according to 2019 numbers from the Kaiser Family Foundation. 

Oregon Bucked Trends

Oregon bucked many of the most alarming national trends.

While the percentage of employees spending more than 10% of median income on employer health insurance increased, it was by less than half the national increase, growing from 9.7% to 10.3% between 2010 and 2020. During that period, the percentage peaked in Oregon in 2015 and then fell.

Of the approximately 10% of median income Oregon workers spent on employer-provided health insurance, about 6% was premiums and about 4% deductibles in both 2010 and 2020. 

The amount workers paid for premiums in Oregon varied greatly depending on whether the worker had single or family coverage. 

With workers covering 17% of the total cost of coverage in 2020, Oregon had the third most affordable single coverage premium costs in the nation behind only Hawaii and Washington. In 2010 workers covered 16% of costs.

Individual coverage plans grew on average 3% each year during this period in Oregon. That was lower than the national average by more than a percentage point. Between 2019 and 2020, single coverage premiums fell by around 1% in Oregon while they increased by around 3% nationally. 

On the other hand, for family coverage, Oregon was the 21st worst in the country with premium costs just over the national average. While these costs increased between 2010 and 2020 at around the same rate in Oregon as nationally, between 2019 and 2020 it spiked to more than three times the national rate, growing by 13.3%. 

Oregon followed the national trend of employer health insurance costs outpacing growth in median income but the pattern was significantly less stark. Between 2010 and 2020, the combined cost of deductibles and employee premiums rose 57.3% in Oregon to $7,754, however, Oregon’s fast-growing median income grew by 47.7% to $75,346 during the same period. 

Costs Hurting Care

The study also highlighted the growing numbers of  “underinsured” Americans whose deductibles are more than 5% of household income. In 22 states, people at the midrange of the income distribution were underinsured in 2020. That’s up from just Arizona in 2010, according to the study. 

Deductibles averaged 4.1% in Oregon, up from 3.3% in 2010 but below the 2020 national average of 4.7%.

The study attributed rising insurance costs for workers to growth in health care spending, singling out prices charged by health care providers and drug manufacturers in particular.

Citing data from the Health Care Cost Institute, the study said spending per person in employer plans grew by nearly 22% between 2015 and 2019.  

This trend is having unfortunate effects, the study said. High deductibles often prevent people from seeking needed medical care, it noted, citing a 2020 Commonwealth Fund surve.

And when the “underinsured” do get care despite high deductibles and overall costs, they often find themselves in substantial medical debt.

“[M]ore than 40 percent of adults with a deductible [of $1,000 or more] reported problems paying medical bills or having to pay off medical debt,” the study added.

While the report focused largely on the decade prior to the COVID-19 pandemic, it noted that 6% of working-age adults in the U.S. reported losing their employer health insurance during the COVID-19 pandemic. It added that few of those people became uninsured because of the Affordable Care Act’s marketplace subsidies and expansions in Medicaid eligibility. 

To address the problems, the study suggested a combination of revamping old policies and introducing new ones.

For updating existing policies, the report suggested addressing a “glitch” in the 2011 Affordable Care Act that prevents workers from accessing marketplace premiums for their family if their employer offers single coverage judged satisfactorily affordable. 

The study also recommended:

passing the Build Back Better Act, 
adding a public plan option to current healthcare marketplaces, 
allowing people to auto-enroll in health coverage, 
lowering current deductibles and out-of-pocket costs for marketplace plans, and 
instituting stronger consumer protection rules for medical debt collection.

You can reach Henry Brannan at henrybrannan (at) gmail (dot) com or via Twitter at @henry_brannan.