Originally published Jan. 8, 2015
I’m hearing a growing sense of frustration from people who pay a lot for workplace health insurance, and a new study from The Commonwealth Fund confirms there’s good reason.
The state-by-state analysis of employer coverage shows that residents of the Carolinas pay a steadily-growing portion of their income for premiums and deductibles. And in the South, where median wages are lower, those rising costs take a bigger bite, the study concludes. (Read the report here and check interactive state maps here.)
Especially hard hit are North Carolina employees with family coverage. While costs for employee-only coverage here are in line with national averages, family coverage costs more in North Carolina. And premiums for family coverage are growing at just over 10 percent a year during the past three years, compared with 5.9 percent nationwide and 7.2 percent in South Carolina.
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Folks I talk to often blame Obamacare. They’re paying taxes to subsidize premiums and deductibles for people who don't have workplace coverage. But employees who are eligible for coverage that meets the standards of the Affordable Care Act can't tap into those subsidies themselves, even though they may be paying sums that seem far from affordable.
Researchers from The Commonwealth Fund conclude that the relationship between rising worker costs and the ACA is complex (the fund is a private foundation that “underwrote a considerable part of the research” underlying the act). Some aspects of the act, such as allowing young adults to stay on parents’ plans until age 26 and requiring full coverage of preventive care, could drive up costs, the report says. But overall premiums were growing much faster in the years before the ACA kicked in than in years since, the report notes, indicating that such costs “have been easily absorbed in insurance markets.”
In fact, the study indicates that North Carolina employers have seen a more dramatic slowdown in premium growth than counterparts across the country. For instance, N.C. premiums for workplace plans were growing at 5.6 percent a year from 2003 to 2010, compared with 5.1 percent nationally. But from 2010 to 2013, N.C. premiums have risen by only 1.6 percent a year, compared with 4.1 percent nationally.
So why doesn’t this ring true to workers? Because, as I and many others have noted before, employers are passing along a bigger share of the costs, forcing their staff to cover a bigger share of premiums and/or higher out-of-pocket costs. For instance, that 1.6 percent annual growth in the overall cost of a single-person workplace policy in North Carolina translated to a 4.7 percent annual increase in the employee's share. And while the overall cost of a family policy in North Carolina has grown only 3.3 percent a year since 2010, the employee's share has risen by 10.3 percent a year.
“The key question is how to slow health care cost growth in a way that benefits middle class and lower-wage working families – that is, keeping premium growth in check without eroding benefits,” the Commonwealth study concludes. “This will likely require concerted efforts that span the private and public sectors. The challenge to policy leaders will be to pursue reforms that improve the quality of health care, rein in cost growth, and ensure that savings are shared with patients and families across the income spectrum.”