11.5% of Working Family Incomes Go to Healthcare

Many working families are spending more of their incomes on healthcare, a new Commonwealth Fund report.

“Trends in Employer Health Care Coverage, 2008–2018: Higher Costs for Workers and Their Families,” found that health insurance costs and deductibles have been growing faster than median income in all states over the last decade. The report provides a state-by-state look at the cost of healthcare for the vast majority of people under age 65 years in the United States-164 million-who get their health insurance through an employer.

For middle-income people with employer insurance, the combined cost of premium contributions and deductibles amounted to 11.5% of income in 2018, up from 7.8% in 2008.

“We conducted this study to look at the trends in how much insurance is costing workers in premiums, deductibles, and as a share of their income across states,” says David Radley, the Commonwealth Fund’s senior scientist and report author.

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This research, which has not been done elsewhere, shows wide variation across the 50 states in the burden that health costs impose on working age Americans with employer-sponsored insurance, according to Radley. “It shows that over the last decade, premiums and deductibles have taken up a larger share of families’ income across the country,” he says.

“Healthcare and health insurance coverage are essential to people’s well-being and financial security, and yet employer health coverage is leaving millions of families exposed to high, and potentially unaffordable, costs,” says Commonwealth Fund President David Blumenthal.

“Stagnant wages make the burden of higher cost-sharing only harder to bear,” says Blumenthal. “This could adversely affect the morale and productivity of the healthcare workforce. Additionally, this trend could be bad for hospital finances because people who are underinsured will avoid using healthcare or find themselves facing bills they cannot pay. The continued low utilization and the addition of bad debt to the bottom line is not good for health systems and could lead to providers facing more uncompensated care and/or bad debt. Though the ACA generally reduced uncompensated care for hospitals, this trend threatens to, at least in part, reverse that relief that the ACA provided.”

Other unique findings of the report include:

• The average total cost of premium contributions and potential spending on deductibles climbed to $7,388 in 2018-with workers in nine states spending more than $8,000 on their healthcare (Arizona, Minnesota, Nevada, New Hampshire, New Jersey, North Carolina, South Dakota, Texas, and Virginia).

• In 18 states, average deductibles were 5% or more of median income and as high as 6.7% in Mississippi. (The Fund defines underinsured as having a deductible equivalent to 5% or more of income.)

• Worker contributions to family plans averaged $5,431 in 2018 and ranged from $3,862 in Washington to $6,597 in Virginia.