Median household income has not kept pace with health insurance costs, creating a financial squeeze for working families who are paying a growing share of their income for plans with less coverage, according to a new report by the Commonwealth Fund.
The report paints a sobering picture of how employer-sponsored health insurance — which covers the majority of Americans under age 65 — is becoming increasingly unaffordable for middle-income families.
“As your deductible increases, you’re less likely to get needed care, to fill prescriptions you need, to go to the doctor when you’re sick. These [deductibles] act as a financial barrier to care,” said Sara Collins, a vice president at the Commonwealth Fund and lead author of the report.
The report is based on an analysis of the Medical Expenditure Panel Survey-Insurance Component, a federal survey of more than 40,000 private-sector employers about their health insurance plans in 2018.
Premiums and deductibles accounted for about 10% of workers’ income in Pennsylvania and New Jersey in 2018. A decade earlier, these costs accounted for 6.3% of income in Pennsylvania and 5.8% of wages in New Jersey.
Nationally, workers spent an average of 11% of their income on premiums and deductibles in 2018, though in some states, insurance costs ate up as much as 16% of wages.
Rising deductibles are largely responsible for driving up employees’ share of health-care costs.
The average deductible for an employer-sponsored health plan in 2018 was $2,711 in Pennsylvania and $3,164 in New Jersey.
That’s far less than the out-of-pocket costs attached to individual health plans through the Affordable Care Act marketplace, where deductibles can exceed $6,000 for individual coverage.
But as deductibles rise and account for a growing portion of wages, families with employer health plans risk being “underinsured,” meaning they are unable to afford health care because of the out-of-pocket costs they will be responsible for until their deductible is met.
Collins and David Blumenthal, president of the Commonwealth Fund, said the report’s findings should be a call to action for federal lawmakers.