Are all Americans Spending More on Health Insurance?
Is Everyone’s Health Insurance Cost Going Up?
Both health insurance premiums and out-of-pocket cost-sharing amounts have been increasing rapidly for everyone. The middle-class has suffered unequally.
Many members of the middle class neither receive subsidies nor necessarily make enough to afford medical services; they are spending more than they did a decade ago, but might not have the money for the cost-sharing that would enable them to use the health insurance they have.
People buying insurance through the Healthcare.gov Marketplace are still receiving subsidies and tax credits based on income, but even this group can struggle with high out-of-pocket costs. Meanwhile, people with employer plans, particularly those covered by small employers, face challenges despite employer contributions.
In other words, assistance is there on the marketplace and the employer market, but despite assistance (and especially without assistance or enough assistance), the middle class is facing some serious hurdles because of cost when it comes to healthcare.
According to KFF.org, the average employed family’s premium increased 51% between 2002 and 2007; then 30% between 2007 and 2012; then 19% above that between 2012 and today. Although the cost has been increasing less dramatically in the last two years than it did in the period from 2002 to 2007, the price is still staggering.
Does this mean that those who are employed can afford health care? Not exactly.
The average worker in a large company pays almost $6,000 a year for insurance premiums now while those in small companies pay almost $7,000. Family coverage runs an average of $18,800 in annual premiums. A third of the workers at small companies pay the full cost of family coverage while fewer than 10% of workers in large firms pay the full cost.
The average deductible has also increased. It is now a little over $2,100 for those in small firms and a bit over $1,200 for small ones. High deductible plans with individual deductibles of over $5,000 are increasingly common. For more information, see our page on high deductibles.
Health insurance purchased through the healthcare marketplace can vary widely depending on which state you live in, your income, family size, and benefits from employment. You are probably eligible for subsidies if you make less than $40,000 a year.
Marketplace costs changed this year as well. Insurance companies factored in the potential end of cost-sharing reduction payments, but that affected only silver plans, not bronze or gold plans. In many parts of the country, the lowest cost bronze plan has no cost after tax credits in 2018.
The people hurt most by the cost-sharing increases this decade are neither on the bottom of the economic pile nor at the top. Those with very low incomes can often get Medicare or generous subsidies. Those with high incomes can afford insurance premiums and cost-sharing.
Meanwhile, it is those in the middle, especially those families and individuals making between $30,000 and $90,000 a year, that experience the greatest difficulty. If you are in this group, see our page on What to do if you can’t Afford Health Insurance for suggestions.
Of course, the real problem here is that neither keeping things as they are nor repeal and replace efforts like past GOP plans do much to fix this underlying problem of rising costs. Real reform is needed, but exactly what sort of reform will ease the burden of the middle class is unclear. With that said, there is some wisdom in looking a single payer and public options. Many in the middle class struggling now is likely to pay less net under a single payer or public option systems like Medicare-for-all or a Medicare buy-in (as, although their taxes would go up, their health insurance costs would go down). This doesn’t mean single payer or a public option are the perfect solutions, instead, these are only examples of ideas that both address the need for health coverage and affordability needs.