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Employee Cost-Sharing

By April 25, 2016Commentary

One of workers’ biggest concerns is the cost of their health care, both in terms of premium contributions and cost-sharing for specific medical services.  A Kaiser Family Foundation Brief, using the Peterson Health System Tracker and data from the Truven commercial plan claims database, illustrates how much cost-sharing amounts have risen in the last few years.   (KFF Brief)   The change is fairly dramatic, for example, from 2007 to 2015 the average applicable deductible under commercial health coverage rose from $303 to $1077, more than tripling.  While the nominal amount of the deductible or copayments is important, it is more useful to understand how much do workers and their dependents actually spend under the cost-sharing provisions in their plans.  Here too the news is not great.  From 2004 to 2014 the average payments under deductibles rose from $99 to $353, or over 250%; while coinsurance spending went from $117 to $242, up 107%.  Some good news was that during this period, spending under copayments fell from $206 to $152.  But the overall patient cost-sharing rose 77%, from $422 to $747.  And the actual amounts could be even higher as these numbers may not reflect out-of-network balance billed amounts.  Meanwhile, employers paid an average of $2748 for medical costs in 2004, climbing 58% to $4354 in 2014.  Employers therefore covered about 85% of all actual medical costs in 2014.  For comparison, average wages climbed only 32% in this time, so out-of-pocket spending rose over twice as fast as wages.

The top 15% of individuals in the database accounted for 75% of all spending and had much higher out-of-pocket spending.  Employers paid an average of $23,750 for this segment in 2014 while the member paid an average of $2679 out-of-pocket, four times the overall average.  But employers were picking up a significantly higher percent of all spending for this group.  5.5% of covered persons had actual deductible payments over $1500 and 7.% had total cost-sharing payments over $2500.  Deductibles were less than a fourth of all out-of-pocket spending in 2004, but almost half of it in 2014.  The numbers reflect a lot of pain for low and middle-income Americans.

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