Traditionally, generous health coverage has been one of the benefits of working for a large employer. Big businesses and large public-sector agencies are able to leverage their size to negotiate better rates with insurers.
However, those with access to large-employer health plans have not been insulated from the rapid increase in healthcare costs over the past two decades. As insurers have demanded higher prices, employers have shifted a bigger share of the cost onto employees in the form of higher premiums, co-pays, and deductibles.
A new study by researchers at the Kaiser Family Foundation finds that from 2008 to 2018, average premiums for a family on a large-employer health plan increased 55 percent, while average cost-sharing increased 70 percent. During that time, average wages rose only 26 percent.
As a result, average annual healthcare spending by families covered by large employers has increased by two-thirds, from $4,617 to $7,726. For lower-wage employees of large firms, that amounts to a significant share of their annual income.
Most of the change is due to the cost of healthcare, rather than employers shifting the burden to workers. In the decade starting in 2008, the average portion of healthcare costs covered by employers declined only slightly, from 68 percent to 66 percent.
In fact, the average large employer covers a larger share of prescription drug costs now (89 percent) than it did a decade ago (80 percent). The average employer share of inpatient services has remained flat, at about 93 percent. Meanwhile, employers have decreased the share of outpatient services they cover, from 84.8 percent to 80.8 percent.
Perhaps the most notable change in plan design has come from the growth in popularity of high deductibles. Far more workers have annual deductibles, and the size of the average deductible has risen significantly. In 2003, only 20 percent of the average employee's out-of-pocket costs went toward a deductible. By 2017, deductibles accounted for 51 percent of out-of-pocket spending.
From: BenefitsPro
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