It’s not just people without health insurance who get squeezed in our system. People who have coverage are also feeling the pressure.
According to the Kaiser Family Foundation’s annual report on employer-provided health insurance, a typical family plan now costs nearly $20,000 a year (split between employer and employee), up from just over $12,000 a decade ago. About half of non-elderly Americans get health insurance through an employer – either their own or a family member’s – making this group the largest piece in the health care puzzle.
There has been appropriate concern about the 27 million people who are uninsured, but more than 150 million Americans with employer-provided coverage are usually left out of the conversation when it comes to health care reform, because they are considered to be OK. But they are not OK.
WAGES STAGNANT AS PREMIUMS RISE
As premiums rise, employers are paying more to insurance companies and not to their employees. Workers are not only paying more for their share of a more expensive premium, but also are paying a bigger share of the premium. Since 2008, the overall cost of health insurance premiums for covered employees has grown by 54 percent (both employer and employee), but the share paid by employees has increased by 65 percent.
When they need health care, insured workers are also paying more out of pocket than in 2008. Ten years ago, the average deductible in an employer-sponsored plan was around $300. Last year, the average was more than $1,330.
These figures are even more troubling in the context of stagnant wages, which have barely kept up with inflation over the past 10 years. According to Kaiser, deductibles have climbed eight times faster than wages. Rising health care costs, usually hidden behind opaque billing practices, are eating away at the incomes of consumers, who are the engine of our economy.
Americans’ reliance on employer-sponsored insurance is a quirk of history. During World War II, when wage and price controls prevented employers from raising wages to recruit workers, the notion of fringe benefits was introduced.
HIDDEN SUBSIDY FOR EMPLOYER PLANS
Employer-sponsored plans are the beneficiary of a huge, hidden public subsidy. Health premiums are tax deductible, for the employer as well as the employee, and the deduction represents the single most costly tax expenditure in the entire federal budget, or $235 billion every year. This number automatically climbs every time the cost of health insurance goes up, and it has the effect of pouring public money into the system without calling for any accountability from health care providers or insurance companies.
These figures should sound an alarm for policymakers. America’s high cost of health care is not just a question of people without insurance using hospital emergency rooms for their primary care. It’s also a situation where escalating costs put pressure on family finances – even before anyone in the household gets sick.
No meaningful health care reform will be possible without looking at our reliance on employer-sponsored plans. Just because the people in them have insurance doesn’t mean that they are OK.
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